Analyst Actions: MF Global, Big 5 Sporting Goods, Sprint Nextel
CREDIT SUISSE DOWNGRADES MF GLOBAL TO NEUTRAL FROM OUTPERFORM
Credit Suisse analyst Howard Chen says the magnitude of MF Global Ltd.'s (MF) trading loss is disconcerting and calls into question the degree of risk taking/risk management. He says while it appears its customer business is largely unaffected, he sees heightened risk profile for MF shares in the near- to intermediate-term. Fundamentally, more limited capital flexibility is top of mind to him.
Given year-to-date weakness in the exchange group and robust fundamentals, Chen currently sees better risk/reward in best-in-class exchanges (ICE, CME, Deutsche Boerse in Europe). He notes, unfortunately, it is reminders such as these that once again reinforce to him the superior financial safeguards and lower probability of outsized customer losses at financial exchanges.
WEDBUSH CUTS TARGET FOR BIG 5 SPORTING GOODS
Wedbush analyst Jeff Mintz says Big 5 Sporting Goods (BGFV) $0.28 fourth quarter EPS beat his and the consensus $0.26 estimate on slightly better gross margins and lower SG&A expenses. He notes, however, that after posting its worst comp quarter in over 10 years (same-store sales fell 4.7% in the fourth quarter 2007 ), BGFV guided both first quarter and second quarter comps to negative low-to-mid-single digits.
Mintz believes this guidance assumes that the consumer continues to be weak throughout 2008. As such, he cuts his $1.30 2008 EPS estimate to $0.95 and $15 target price to $13. However, he says his model also assumes that BGFV returns to positive comps in 2009 with a steady increase throughout that year
He sets $1.32 2009 EPS estimate. He reiterates buy on the stock.
CITIGROUP KEEPS HOLD ON SPRINT NEXTEL, CUTS TARGET
Citigroup analyst Michael Rollins says Sprint Nextel's (S) "alarming" first quarter guidance suggests distribution productivity is falling, especially for CDMA; rate plan migration is eating further into ARPU, which is highly dilutive to OIBDA, pushing OIBDA trough to around $7.2 billion by 2009-2010 by his estimates.
Rollins does not think new rate plan promotions are enough to fix what he views as enduring gaps in the company's marketing strategy. He still looks for progress in what he views are critical areas for Sprint to fix: quality perception; pricing perception in the more popular rate plan pricing ranges; cost structure that needs to absorb investments in customer care.
He cuts $0.58 2008 EPS estimate to $0.19, and $0.46 for 2009 to a $0.14 loss per share. He cuts his price target for the stock to 10.
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