Analyst Actions: Merrill Lynch, UBS, Oracle

Analyst Actions: Merrill Lynch, UBS, Oracle


Oppenheimer analyst Meredith Whitney says she's cutting $0.45 first quarter EPS estimate for Merrill Lynch (MER) to $3.00 loss per share, and $0.72 first quarter EPS estimate for and UBS (UBS) to $2.75 loss to reflect drops in observable market indices that are likely to cause material mark-to-markets. She says revised estimates include about $6 billion in write-downs for Merrill and $11 billion for UBS.

Whitney believes first quarter results for large-cap banks and brokers will be a rude awakening; many expected the fourth quarter to be the "kitchen sink." She thinks Merrill will go through the disruptive step of structural reorganization, which will dominate the bulk of 2008.

She urges investors to steer clear of the group until assets are truly purged and valuations are significantly lower. She maintains an underperform opinion on Merrill and UBS shares.


Bear Stearns analyst John DiFucci says Oracle's (ORCL) third quarter revenues were shy of forecasts, while EPS was in line, as operating margin rose by almost 200 basis points vs. a year ago. He says the revenue miss was entirely due to relatively weak applications (apps) license sales. Meanwhile, he says cash flow was strong and deferred revenues also topped estimates.

DiFucci cuts $0.44 fourth quarter EPS estimate to $0.43, and $1.54 for fiscal year 2009 (May) to $1.51. He continues to rate ORCL outperform with a 28 target price.

He expects ORCL stock may stall over the short term, but believes it remains among the best positioned companies in the software sector. He adds that the entire software sector is likely to weaken on the heels of ORCL's results.

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