Analyst Actions: Intel, Yahoo, WebMD, Manpower
Intel posted solid third-quarter results after the close of trading Oct. 16. Goldman Sachs raised its 2007-09 EPS estimates and reiterated its buy rating on the shares on Oct. 17.
Analyst James Covello says the chipmaker's third-quarter results topped Intel's revised guidance, and its non-GAAP EPS of 31 cents beat the Wall Street consensus and his own estimate of 30 cents. Covello says the slight EPS upside was driven by higher sales and lower taxes, partially offset by a lower gross margin and higher expenses. He also notes that Intel's fourth-quarter sales and margin guidance of $10.8 billion and 57% surpassed the Street's $10.4 billion and 55% estimates, respectively. The analyst says that while the third-quarter results and fourth-quarter guidance once again reinforced Intel's solid execution, the key for investors post-earnings will be the sustainability of the company's cyclical growth.
Covello raised his EPS estimates from $1.14 to $1.16 for 2007, from $1.30 to $1.55 for 2008, and from $1.50 to $1.65 for 2009. He lifted his $28 target price to $30.
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Yahoo posted third-quarter results that topped analyst forecasts after the close of trading Oct. 16. Needham & Co. raised its 2007 and 2008 EPS estimates on Oct. 17.
Analyst Mark May says Yahoo's third-quarter GAAP EPS of 11 cents topped his 7 cents estimate on stronger-than-expected revenues. He notes that page view and usage growth remained solid (up 20%) and the company's new Panama platform helped improve search monetization, but the company's Affiliate segment continued to suffer from market share losses to Google (GOOG), the purge of low quality affiliates, and higher traffic acquisition cost rates. May also notes that due to Yahoo's solid third-quarter results and the benefits from two acquisitions closed in July, the company increased the midpoint of its 2007 guidance range.
May raised his his 74 cents pro-forma EPS estimate for 2007 to 79 cents, within the company's guidance, and his 80 cents 2008 forecast to 84 cents. He maintains his hold rating, as he believes the stock's current valuation is fair.
WEBMD HEALTH CORP.
WebMD Health Corp. cut its third-quarter revenue guidance after the close of trading Oct. 16. Goldman Sachs said on Oct. 17 that it expects the shares to be weak on the news.
Analyst Anthony Noto says the $86.5 million midpoint of the company's updated third-quarter revenue range is 5.5% below its prior midpoint of $91.5 million, but WebMD's $23.3 million EBITDA midpoint is unchanged, reflecting stable-to-accelerating year-over-year growth and higher-than-expected margins. Noto believes the company's revenue shortfall reflects delays in campaigns going live due to review processes and implementation. Noto expects WebMD shares to be weak after its pre-announcement as this marks first quarter the company has not met or exceeded consensus expectations.
The analyst expects the shares to see some multiple contraction given that WebMD had a premium valuation, in part due to its consistent outperformance and significant visibility. The analyst kept his neutral rating on the stock.
Manpower Inc.'s third quarter results released Oct. 17 topped Wall Street forecasts. Stifel Nicolaus raised its 2007 and 2008 EPS estimates.
Analyst James Janesky says Manpower reported EPS of $1.57 in the third quarter, which was above his $1.41 forecast. He notes that the French market, which accounts for about 35% of Manpower's revenues, stabilized during the quarter after management indicated during a second-quarter conference call that the market had softened. Janesky says Right Management, the company's outplacement division, was also particularly strong during the third quarter, due to wins in the automotive and financial services industries. The analyst believes the outlook for Right Management is bright as the employment market weakens over the next several quarters.
Janesky raised his EPS estimates for 2007 from $5.35 to $5.63, and his forecast for 2008 from $5.56 to $5.70. However, considering the uncertainty surrounding the global economy, he reiterated his hold rating.