Analyst Picks and Pans: Nasdaq, Myriad Genetics, Sealy
Nasdaq OMX Group (NDAQ)Deutsche Bank downgrades to hold from buy
Deutsche Bank analyst Michael Carrier said in a July 1 research note that Nasdaq OMX's price-to-earnings valuation gap with competitor NYSE Euronext (NYX) has narrowed to a fair trading range. That valuation overall remains low, Carrier noted, but he added there are few catalysts that could push the stock price much higher.
Carrier has a price target of $23 for the stock.
Aside from the shrinking valuation gap between its nearest competitor, Carrier said the overall exchange sector will continue to see challenges in the upcoming quarter. Cash equity volumes are declining from high levels, pricing pressures remain amid strong competition and the options market may face declining volumes as well as more competitors entering the marketplace, Carrier wrote.
Myriad Genetics Inc. (MYGN)Oppenheimer downgrades to perform" from outperform
Shares of Myriad Genetics Inc. plunged July 1 after the company forecast disappointing revenue from its molecular diagnostics business, which provides almost all its revenue.
The Salt Lake City-based company said patients have delayed or canceled visits to doctors because of rising unemployment levels. It cut its annual revenue forecast to $326 million from $330 million. Myriad's fourth-quarter forecast of $86 million was about $4.6 million below analyst estimates.
Oppenheimer & Co. analyst Amit Hazan said most of the shortfall came from diagnostic tests for ovarian and uterine cancer, a market that he believes is key to Myriad's growth. There isn't much room for improvement in cancer diagnostic sales, he said.
In addition to downgrading the shares, Hazan removed his price target of $44 per share, saying testing growth has slowed and Myriad's quarterly results could be uneven.
"What worries us about the fourth-quarter sales miss is it's impossible all of it was related to the economy, implying growth in testing of 'cancer' patients has slowed too," he wrote.
Sealy Corp. (ZZ)KeyBanc Capital Markets maintains hold
After the close of trading June 30, Sealy posted a loss for its fiscal second quarter due to special charges and the continued weak retail environment. The North Carolina-based mattress and bedding company said its sales fell more than 20% to $298.5 million.
Sealy posted a loss of $5.2 million, or 6 cents per share, for the quarter, down from a profit of $12 million, or 13 cents per share, in the prior year.
KeyBanc Capital Markets analyst Bradley Thomas said on July 1 he was waiting for more signs of a more stable consumer spending environment.
Thomas adjusted the firm's profit forecasts to account for the second-quarter results. He raised a fourth-quarter profit estimate to 2 cents from 1 cent but lowered a 2009 estimate to 16 cents from 18 cents. For 2010, he raised his estimate to 20 cents from 19 cents.