Analyst Actions: Palm, Blue Nile, Take-Two, TD Ameritrade
JP MORGAN CUTS ESTIMATES FOR PALM
JP Morgan analyst Paul Coster says Palm's (PALM) $0.07 second quarter pro forma (PF) loss on $349.6 million revenue beat $0.08-$0.10 loss guidance, but third quarter guidance for $0.14-$0.16 PF loss on $310-$320 million revenue is significantly below the Street's $0.04 loss on $358 million in revenue. He notes negative impact from a stronger mix of lower ASP Centro sales; PALM will also incur $16-$18 million restructuring charge in the third quarter.
Coster says Palm's decision to suspend specific financial guidance in lieu of qualitative trends is also mildly troubling. He widens $0.26 fiscal year 2008 (May) loss per share estimate to a $0.38 loss, and narrows $0.12 fiscal year 2009 loss to $0.09 loss.
He believes Palm is at risk of losing share as it navigates its restructuring process given growth rates of Tier 1 handset OEMs. He keeps underweight opinion on the stock.
CITIGROUP UPGRADES BLUE NILE TO BUY FROM HOLD
Citigroup analyst Mark Mahaney says he believes the recent 9% correction in Blue Nile (NILE) shares (post third quarter results) provides an attractive entry point, especially given some key positive factors. He says his proprietary Web traffic analysis indicates fourth quarter sale units could be in the 77,000-90,000 range vs. his 79,000 estimate, which would indicate to him an in-line or plus quarter vs. market expectations for a miss.
Mahaney also says com.Score data indicate holiday sales are running at 18% year-over-year, in line with his estimate; believes market concerns about soft fourth quarter online retail sales are overblown. Further, sees the potential for future share buybacks.
He sees EPS of $1.05 for 2007 and $1.28 for 2008. He has a $88 target price.
CITIGROUP UPGRADES TAKE-TWO INTERACTIVE SOFTWARE TO BUY FROM HOLD
Citigroup analyst Brent Thill says he has buy opinion on Take-Two Interactive (TTWO) because: 1) he's more comfortable with the release timing of Grand Theft Auto 4 (GTA 4) and the quality of the title; historically the best time to buy TTWO is 4 months before a GTA launch; 2) he believes TTWO is a strategic asset and could be acquired; 3) thinks sentiment remains overly bearish, as reflected in the company's short interest (32% of the float) and valuation.
Thill says with current installed base of only 35 million next-generation consoles likely rising to 200 million-plus by 2012, he's positive on the video game industry. He notes fourth quarter earnings topped expectations, but guidance disappointed.
He sees EPS of $1.40 for 2008 and $1.57 for 2009. He ups $23 target price to $25.
FRIEDMAN, BILLINGS REITERATES OUTPERFORM ON TD AMERITRADE
Friedman Billings analyst Matt Snowling says TD Ameritrade Holding's (AMTD) announcement of upside to previous first quarter guidance was surprising, well above his prior $0.33 forecast, which he raises today to $0.39. He says upside appears attributable to lower expenses, perhaps a scaling back of company's $100 million investment run rate.
He says most of November client metrics tracked at or were slightly better than his model. He notes AMTD also reported better client asset levels.
Snowling raises $1.28 fiscal year 2008 (September) operating EPS estimate to $1.40, his $1.40 fiscal year 2009 to $1.49. He keeps a $23 target price.