Friday July 18 6:57 PM EDT
Sun Micro stock ends at 5th straight record on results
PALO ALTO, Calif. (Reuter) - Shares of Sun Microsystems Inc. Friday surged to their fifth straight record closing high as analysts raised earnings forecasts for the network computer products supplier a day after it reported stellar results.
Shares of Sun, based in Mountain View, Calif., rose 75 cents to $46.31 on Nasdaq, where it the third most heavily traded issue on volume of 16.8 million shares. The stock has gained more than 70 percent from a late April low of $29.125.
``A solid high-end demand backdrop is fueling Sun's growth,'' wrote Goldman, Sachs & Co. analyst Laura Conigliaro in a research note.
Goldman continued to recommend buying Sun's stock, saying it could reach $60, and raised its fiscal 1998 earnings estimate by 15 cents a share to $2.35.
However, Morgan Stanley downgraded Sun to outperform from a strong buy, taking the stock as low as $42.625 early Friday before an afternoon rebound.
Late Thursday, Sun said profits in the quarter ended June 30 rocketed 94 percent to $237 million from $122 million in the year-ago period, which included a one-time charge. Sales soared 26 percent to $2.54 billion from $2.02 billion.
Earnings per share surged to 61 cents from 31 cents, after a write-off of 12 cents a share. This was 2 cents above Wall Street's estimate of 59 cents a share.
Analysts noted after a conference call with Sun executives that the company is successfully branching out into new lines of computing beyond its core workstation business, and benefiting from the growth of computer networks. Conigliaro said Sun's underlying growth rate now appears to have accelerated. ``Fiscal 1998 is awash with new products, giving Sun ample opportunity to capitalize on its current momentum,'' she wrote.
New products in fiscal 1998 are expected to be led by new workgroup servers in the current quarter, followed by more enhancements to its Starfire high-end servers, introduced in January.
Sun will also add storage products. On Thursday it announced a deal to buy Encore Computer Corp.'s storage business assets for $185 million. |
