Analyst Actions: Monsanto, Overstock.com, Murphy Oil, Digital River
GOLDMAN MAINTAINS BUY ON MONSANTO
Goldman Sachs analyst Robert Koort says Monsanto's (MON) first quarter EPS was well ahead of the company's $0.35 preannouncement. It says surprise driven by higher global RoundUp product prices and volumes.
Koort says Monsanto raised fiscal year 2008 (August) EPS guidance represents impressive 25%-30% growth. He notes Monsanto now thinks its Dekalb corn seed brand could gain 2-to-3 percentage points in U.S. market share in fiscal year 2008, and it sees triple-stack corn product penetration growing some 50% over fiscal year 2007.
He believes the agricultural sector offers exciting alternative to overall slowing U.S. economy, and thinks Monsanto offers unmatched combo of near-term EPS visibility, with medium- to longer-term pipeline potential. He puts EPS and target under review.
BROADPOINT CAPITAL KEEPS NEUTRAL ON OVERSTOCK.COM
Broadpoint analyst William Lennan says he views Overstock.com (OSTK) President and COO Jason Lindsey's decision to resign as a "key loss" to the company. He notes Lindsey has played the role of sounding board and partner to CEO Patrick Byrne and has been instrumental in helping Byrne bring (relative) stability and (relative) financial discipline to OSTK after a particularly harsh 2005.
Lennan says, "in view of OSTK's recent decision to restart television advertising, which, in its first iteration was a giant expenditure sinkhole with disproportionately low returns, Mr. Lindsey's departure occurs at a time when OSTK's need for self discipline could not be greater." He still sees $0.76 2008 loss per share.
BEAR STEARNS DOWNGRADES MURPHY OIL TO PEER PERFORM FROM OUTPERFORM
Bear Stearns analyst Nicole Decker says Murphy Oil (MUR) shares have already reached her yearend 2008 target price of $85. She notes stock has risen 80% since January 2007, compared to 34% for the S&P Integrated Oil Index, and 2% for the S&P 500.
Decker says, based on her 2008 price projection for WTI of $75 a barrel, she believes MUR's stock price fully reflects production growth and that further upside for shares in 2008 is limited. She says at current oil prices, she thinks 2008 EPS could reach $9.50 and share price could see $114 by yearend; however, her near-term view is for downward pressure on oil prices.
CREDIT SUISSE UPGRADES DIGITAL RIVER TO OUTPERFORM FROM NEUTRAL
Credit Suisse analyst Philip Winslow notes his cautious outlook on Digital River (DRIV) stock was predicated on his belief that growth rates would slow given the revised Symantec (SYMC) contract and risk existed to estimates based on the uncertain timing of new business from Microsoft (MSFT) and Symantec.
Winslow notes now, however, with reaccelerating year-over-year growth in revenue and EPS through the first half of 2008, combined with relative valuation multiples near or below historical ranges, as well as overly negative investor sentiment (especially related to the SYMC subscription business transfer), he views DRIV risk/reward as attractive.
He sees EPS of $1.87 for 2007 and $2.26 in 2008 (both excluding employee stock options). He has a $47 12-month price target on the stock.