Altera's Aggressive Guidance Poses Risk
01.25.05, 9:38 AM ET
J.P. Morgan reiterated a "neutral" rating on Altera (nasdaq: ALTR - news - people ), saying shares of the programmable logic company are "fairly valued." Altera reported fourth-quarter earnings per share of 15 cents, beating J.P. Morgan's estimate of 12 cents and the consensus estimate of 13 cents, based on higher than expected revenue and gross margins, and lower-than-expected operating expenses and taxes. Revenue for the quarter was $239.9 million, beating J.P. Morgan's $235.0 million estimate; gross margins were 69.8%, above J.P. Morgan's 68% estimate. The research firm said it is pleased with Altera's low valuation, high-quality business model, but added that it is concerned with the aggressive guidance, and believes there is a risk to its estimates. "Although Altera expects first-quarter revenue to increase 1% to 3%, we believe the guidance is too aggressive since the turns requirement for the first quarter is in the low 70% range," J.P. Morgan said. The research firm reiterated its calendar 2005 earnings-per-share estimate of 57 cents, but lowered the revenue estimate to $1.03 billion from $1.06 billion. J.P. Morgan issued a calendar 2006 earnings-per-share estimate of 84 cents on revenue of $1.26 billion. |
