S&P Keeps Yahoo Shares at Sell

Plus: Analyst opinions on National Semiconductor, Quiksilver, and more

Yahoo! (YHOO)

Reiterates 2 STARS (sell)

Analyst: Scott Kessler

Yahoo shares are down about 5% this morning following an unconfirmed report in today's Wall Street Journal that the company and AT&T (T) are renegotiating their comprehensive broadband partnership set to expire in April, 2008. We estimate the AT&T relationship might have contributed 2-5 cents in 2006 EPS. We do not think related offerings have been widely deployed to the former BellSouth customers in the southeastern U.S. We also think it is possible that other, similarly situated Yahoo broadband partners could be re-thinking their alliances.

National Semiconductor (NSM)

Reiterates 3 STARS (hold)

Analyst: Clyde Montevirgen

February-quarter operating EPS of 23 cents, vs. 37 cents one year earlier, is 2 cents below our estimate. Revenues were down 14% from the November quarter, reflecting inventory congestion, but gross margin improved sequentially on better sales mix. We see potential margin expansion from higher-end analog business and better utilization, but we remain cautious about competitive pressures and the rate of second half demand growth. We are cutting our fiscal 2007 (May) EPS estimate by 7 cents to $1.08 on larger expense estimates, but we are upping our 12-month target price by $2 to $28, reflecting a higher price-to-sales multiple.

Quiksilver (ZQK)

Reiterates 5 STARS (strong buy)

Analyst: Marie Driscoll, CFA

Shares were down 11% in aftermarket trading Thursday. January-quarter EPS of 2 cents, vs. 15 cents one year earlier, misses our 5 cents view. Rossignol unit trend worsened; Quiksilver cut fiscal 2007 (ending October) guidance to a 5% sales gain and EPS of 53 cents, with Rossignol sales expected down $60 million over the next nine months. FX unit should mitigate sales drop but hurt cost of sales. Core businesses are growing sale at a double-digit pace and margins are expanding modestly with improved sourcing. We are reducing our fiscal 2007 and fiscal 2008 EPS ests to 55 cents and 85 cents, from 70 cents and 90 cents, and our target price to $15 from $18, 18 times our fiscal 2008 estimate.

Standard Motor Products (SMP) : Ups to 3 STARS (hold) from 2 STARS (sell)

Analyst: Efraim Levy

Before special items, Standard Motor Products reports fourth quarter EPS of $0.09 vs. year-ago loss per share of $0.29, better than our $0.11 loss forecast. We are raising our 2007 gross and operating margin projections, before restructuring, and boosting our EPS estimate by $0.14 to $0.94. Peer valuations have risen amid elevated merger and acquisition activity. With our greater confidence in Standard Motor Products's ability to enhance margins, we are raising our 12-month target price by $4 to $16. With a 2.3% dividend yield, we would hold Standard Motor Products for total return.

Big Lots (BIG) : Ups to 4 STARS (buy) from 3 STARS (hold)

Analyst: Jason Asaeda

Jan. quarter EPS of $0.83 vs. $0.33 beats our estimate by $0.16 as positive customer response to increased brand-name closeout and "treasure hunt" offerings drove significant improvements in the gross margin and expense rates on higher inventory turns. We see Big Lots raising sales productivity in fiscal year 2008 (Jan.) on further tweaking of product mix and controlled expansion. Coupled with our expectations of cost cuts and share buybacks, we are lifting our fiscal year 2008 EPS estimate by $0.20 to $1.25. We are also raising our 12-month target price by $8 to $34.

Brinker International (EAT) : Cuts to 3 STARS (hold) from 4 STARS (buy)

Analyst: Mark Basham.

February comparable sales were down 4.9%; compared with year-ago 1.0% gain. We think this contradicts the view that January's 4.5% comp decline was a fluke after year-earlier 6.7% gain. Brinker International estimates 1.0% of the February 2007 drop was from adverse weather. We now think that even though Brinker International will be up against negative comparables for at least the next 12 months, the weak fundamentals we see in the casual dining sector will continue to affect its sales. We are lowering our 2007 (June) EPS estimate by $0.07 to $1.70, 2008's by $0.15 to $1.85, and our target price by $3 to $35.

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