S&P Downgrades AirTran to Hold

Also: Analyst opinions on Quiksilver, Gateway, and Amazon

From Standard & Poor's Equity Research

AirTran Holdings (AAI) : Cuts to 3 STARS (hold) from 4 STARS (buy)

Analysts: Jim Corridore and Stewart Scharf

The shares are down 14% at midday after AirTran Holdings lowers its third quarter growth forecast. The company now sees revenue per passenger mile rising in low single digits, down from its high-single-digit earlier estimate. AirTran Holdings attributes recent softer demand to terrorist threat activity, tropical storm Ernesto and increased industry capacity on the East Coast. We are reducing our 2006 EPS estimate by 15 cents to 60 cents and our 2007 estimate by 50 cents to 75 cents. We are lowering our target price to $10 from $20.

Amazon.com (AMZN) : Maintains 3 STARS (hold)

Analyst: Jason Asaeda

Amazon launches Amazon Unbox, which offers consumers access to thousands of TV shows, movies and other digital video content from over 30 studio/network partners. TV shows can be purchased for $1.99 per episode and most movies for $7.99-$14.99. The latest movies can also be rented for $3.99. We see the breadth of available content and Amazon's large customer base as positives. But we think Amazon Unbox's non-compatibility with Apple (AAPL) hardware, including portable iPods, and potential viewing issues with full-length films on PCs could limit its appeal.

Axcelis Technologies (ACLS) : Maintains 5 STARS (strong buy)

Analyst: David Kaplan

Axcelis Technologies yesterday reiterated its expectations of orders for 10 Optima HD systems this year, and implied that in some cases it may only be a matter of completing formalities. We are encouraged by the number of companies scheduled to demo the new systems and remain optimistic Axcelis Technologies will regain significant market share in 2007. We see the slower semiconductor environment as beneficial for Axcelis Technologies by easing customer transitions to new systems. We are raising our 12-mo. target price by $1 to $10. Trading now at 8.8 times our 2007 earnings per share (EPS) estimate, we believe Axcelis Technologies shares offer a compelling value.

National Semiconductor (NSM) : Reiterates 3 STARS (hold)

Analyst: Tom Smith-CFA, and David Kaplan

National Semiconductor reports August quarter EPS of 35 cents vs. 24 cents, better than our estimate of 30 cents. Revenues were largely in line with our recently lowered estimate, as were gross margins. Revenue declined 5.4% from the May quarter on seasonality, slower demand in the handset market, and the sale of the foundry support business. Backlog fell on cautious customer outlooks, and we expect a 3% sequential decline in revenues for the November quarter despite the usual seasonal strength. National Semiconductor started to include stock option expense in EPS this quarter. Our EPS estimates and our 12-month target price of $26 are unchanged.

Gateway (GTW) : Reiterates 3 STARS (hold)

Analyst: Richard Stice, CFA

The shares opened higher this morning as Gateway names J. Edward Coleman as its new CEO. He joins the company from Arrow Electronics (ARW) where he was President of the enterprise computing solutions unit. Richard Snyder, Gateway's interim CEO since February, will remain Chairman. We view this development as positive, since it eliminates an element of uncertainty and should result in a more formalized business strategy. But given recent operating losses and lack of significant marketshare, we would not add to existing positions. Our 12-month target price remains $2.

Quiksilver (ZQK) : Reiterates 5 STARS (strong buy)

Analyst: Marie Driscoll, CFA

July-quarter EPS of 4 cents, vs. 28 cents one year earlier, beats our 3-cent estimate. While core Quiksilver, Roxy and DC shoes continue, in our view, to be vibrant businesses, and the Rossignol integration is ahead of plan, a soft golf market tempered the launch of Cleveland Golf's Hibore brand, and the company lowered its October-quarter guidance. We are reducing our fiscal 2006 (ending October) and fiscal 2007 EPS estimates to 73 cents and 95 cents, from 80 cents and $1.10, and our 12-month target price to $15, from $17. However, we continue to view Quiksilver as the best play in sports apparel, with significant opportunity for organic growth and margin expansion.

Before it's here, it's on the Bloomberg Terminal.