Analyst Picks and Pans: Whole Foods, Garmin, Electronic Arts
Whole Foods Market (WFMI) Morgan Stanley upgrades to equal-weight
Morgan Stanley analyst Mark Wiltamuth upgraded Whole Foods shares to equal-weight from underweight. He said that the company's $0.25 third quarter EPS topped his $0.18 estimate and consensus $0.19.
Wiltamuth said WFMI bucked the eroding trends in the rest of the grocery industry, showing its first sequential improvements in comparable-store sales in six quarters. He notes comp declines narrowed for the third quarter and continued into early fourth quarter.
With cost controls contributing to margin gains and sales trends showing sequential improvements, the analyst raised his $0.80 fiscal year 2009 (September) EPS estimate to $0.92, $0.81 for fisal year 2010 to $1.06, and $0.92 fiscal year 2011 to $1.15. Garmin Ltd. (GRMN) Needham raisss estimates, but keeps hold opinion
Needham analyst Richard Valera said after several quarters of disappointing results and downward estimate revisions, Garmin returned to its old ways in the second quarter with solid revenue and a substantial EPS beat on much-better-than-expected margins.
Valera raised his 2009 estimates to $2.69 billion revenue/$2.60 EPS from $2.50 billion/$1.75 to reflect second quarter outperformance.
However, he believes that, given longer-term secular declining trend of the company's personal navigation device business (in his view), the company will need to see meaningful success in ultra-competitive smartphone market to re-establish long-term growth.
Electronic Arts (ERTS) Analysts question outlook
EA reported fiscal first-quarter results late Tuesday, posting a loss that was narrower than analysts expected and adjusted sales that was better than analysts expected. But the company left its full-year projections unchanged at an adjusted profit of $1 per share on sales of $4.3 billion.
Analysts expressed some concern about sales of new game titles during the balance of the fiscal year, which includes the crucial holiday season. Broadpoint.AmTech analyst Benjamin Schachter told clients in a note he remains "cautious" on new games, including "Dragon Age Origins," "Saboteur" and "Dante's Inferno." He reiterated a neutral opinion on the stock despite what he called a "solid" June quarter.
Todd Greenwald, an analyst with Signal Hill, called weaker-than-expected sales of "NCAA Football" a possible "canary in the coal mine" for EA. "To us, this highlights a big potential weakness for EA over the balance of the year," he said, keeping a hold opinion on the stock.