From Briefing.com: 5:08PM Genesis Microchip selected by Haier for video controllers into its new mid-range and premium LCD TV models (GNSS) 19.51 +0.31 : CO announces that Haier Group, a TV and consumer electronics manufacturer in China, has designed GNSS' FLI8532, FLI8125 and gm1501 video controllers into its new mid-range and premium LCD TV models now available in China and Europe. Ranging in size from 26 inches to 42 inches, models L26A9-AK, L32A9A, L37A9K-AK, L37A9A-AK, L39A10-AK, L40A9A-AK, L42A9A-AK all use a single-chip solution from Genesis while model L42A9A uses a combination of Cortez and Hudson video controllers.
4:26PM NVIDIA beats by 4 cents, beats on top line (NVDA) : Reports Q4 (Jan) earnings of $0.53 per share, $0.04 better than the Reuters Estimates consensus of $0.49; revenues rose 11.8% year/year to $633.6 mln vs the $625.1 mln consensus. Co reports Q4 gross margin 40.2% vs 40.2% street expectation.
4:20PM Silicon Image reports in line (SIMG) 11.87 +0.46 : Reports Q4 (Dec) earnings of $0.16 per share, excluding non-recurring items, in line with the Reuters Estimates consensus of $0.16; revenues rose 33.2% year/year to $61.4 mln vs the $60.3 mln consensus.
4:14PM LTX Corp reports in-line; guides AprQ above consensus (LTXX) 5.92 +0.21 : Reports Q2 (Jan) earnings of $0.01 per share, excluding non-recurring items, in line with the Reuters Estimates consensus of $0.01; revenues rose 76.8% year/year to $47.8 mln vs the $47.1 mln consensus. Co issues upside guidance for Q3, sees EPS of $0.07-0.10 vs. $0.04 consensus; sees Q3 revs of $51-54 mln vs. $49.5 mln consensus.
4:05PM Metrologic Inst Chairman of the Board to Modify Existing Plan to Sell Shares (MTLG) 22.18 +0.07 : The co announces that its Chairman, C. Harry Knowles, and Director, Janet Knowles, have advised the Co that they plan to modify their previously announced selling program to sell additional amounts of their stock in the Co for estate planning purposes as well as diversification and liquidity. A foundation formed by them is also expected to sell additional shares.
4:20 pm : The indices closed near their best levels of the day, as a more favorable earnings outlook, especially in tech following a strong report and upside guidance from Hewlett-Packard (HPQ 34.02 +2.35), as well as strong economic data gave investors reasons to extend recent buying efforts. The Dow closed at its highest level since June 2001, led by a 7.4% surge in HPQ to a five-year high, as all ten economic sectors finished in positive territory.
Before the bell, Jan. housing starts rose 14.5% to 2.28 mln units (consensus 2.02 mln), the highest rate since 1973, while building permits, a sign of builders' confidence in the housing market, rose 6.8% to 2.22 mln units (consensus 2.07 mln). Providing further validation that economic growth remains solid, jobless claims checked in below the 300K level for a fifth straight week, reflective of strong labor market conditions, while Feb. Philly Fed checked in at its strongest level since August, suggesting continued improvements in manufacturing conditions. The index, released at 12:00 ET, also showed a decline in the prices paid component, which provided some relief on the inflation front.
To that end, the potential impact of pricing pressures stemming from strong economic data, that sidelined some investors during the morning session influenced by Fed Chairman Bernanke's concession that monetary policy actions will be increasingly dependent on incoming data, took a back seat to the possibility that Q1 earnings may now check in better than expected. Not even the inflationary ramifications that higher energy prices can have on discretionary spending spooked the market, as the commodity's 1.7% rebound followed a 6.0% decline over the last two days, left oil prices down more than 12% this month and merely helped the influential Energy sector regain some upside momentum. Upbeat guidance from Baker Hughes (BHI 69.15 +2.98) provided extra sector support.
Strength across the board in Technology, as evidenced in the Nasdaq outperforming its blue chip counterparts, played into our Overweight rating on the sector. Aside from strength in homebuilding helping Consumer Discretionary, the sector also benefited from a 2.0% surge in JC Penney (JCP 57.72 +1.09), which beat forecasts, raised its dividend 44% and authorized a $750 mln buyback plan. Despite consolidation in HMOs, which weighed on Health Care much of the day, strength in drug stocks and biotech, led by an upbeat report from Biogen Idec (BIIB 47.33 +1.61), helped the sector close higher. Even the Industrials sector, which was weak all day as rising oil prices prompted investors to lock in gains that helped the Dow Transports hit a historic high yesterday, eke out a gain. An analyst upgrade on Honeywell (HON 41.56 +0.72) proved just enough to inch the sector above the flat line into the close. BTK +1.8% DJ30 +61.71 DJTA -0.6% NASDAQ +18.20 SOX +1.4% SP500 +9.38 XOI +2.1% NASDAQ Dec/Adv/Vol 1098/1932/1.96 bln NYSE Dec/Adv/Vol 1009/2294/1.66 bln
1:57 pm Wild Oats Markets (OATS)
17.01 +2.37: Shares of Wild Oats Markets have surged following the company's fourth quarter earnings report. Excluding the effect of $1.9 million in one-time items, the specialty grocer posted net income of $5.2 million for the quarter versus a $34.7 million loss in the year-ago period. The bottom-line result translates to $0.17 in profit per share - $0.11 ahead of analysts' forecast. Last year, Wild Oats booked a loss of $1.22 per share.
Driven by a 4.2% increase in same-store sales, and due to 5.5% square-footage growth, the company's top line increased slightly to $282.7 million. Management attributed the year-over-year profit improvement to stronger sales and a 233 basis point gross margin expansion to 29.71%. The company said the margin expansion was due primarily to its ability to strike a balance between sales and promotional activity, and also because of its implementation of new merchandising initiatives focused on improving margins. The company's operating margin, meanwhile, improved 361 basis points to 1.68% as it leveraged payroll and related taxes, improved workers' compensation loss results, and improved health care costs to reduce direct store expenses as a percentage of sales.
Citing continued momentum and improvement in its business, the company projects full-year 2006 EPS of $0.42-0.48, excluding $0.08 in stock-based compensation expenses. Wild Oats expects 4-5% same-store sales growth for the year. According to Reuters Estimates, analysts are looking for $0.27 in earnings per share and $1.2 billion in revenues for FY06. Q1 will be the last period that Wild Oats is up against a loss in the comparable period. Analysts expect EPS of six cents.
Like its rival Whole Foods Markets (WFMI), which reported earnings last week, Wild Oats's stock trades at a sharp premium to the Consumer Staples sector's 17.3x forward multiple. Presently, OATS shares are trading at 37.8x estimated FY06 earnings. In comparison, WFMI sports a 47.0x forward earnings multiple.
--Lisa Beilfuss, Briefing.com
1:43 pm Career Education Corp. (CECO)
33.84 -0.67: Career Education Corp. on Wednesday reported net income for the fourth quarter rose 12% from a year ago, citing strong demand for career education services. In addition, the Hoffman Estates, Illinois-based company announced that its board has approved a $300 million share repurchase program.
Earnings for the three months ending December 31, 2005, were $70.3 million, or $0.70 per share, compared with $62.9 million, or $0.60 per share, a year earlier. Income from operations rose 7% year/year to $104.7 million, while operating margin slipped 20 basis points to 19.8% during the quarter. Revenue was $529.2 million, representing an 8% increase over the same quarter last year. According to Reuters Estimates, analysts were expecting the company to post earnings of $0.67 per share on revenue of $527.8 million.
The increase in revenue was attributable to a 3% increase in student population to 104,200, which includes both the Online Educational Group segment and the Colleges, Schools, and University segment, as well as higher average revenue per student. Online student population was approximately 32,700, representing a 31% increase from a year earlier. Wall Street had forecast a total population of 106,600. During the quarter, new student starts were approximately 28,200, compared with 28,600 last year.
Looking to the current fiscal year, Career Education expects net income, ex-items, to increase about 10% to 12%. That equates to roughly $2.55 to $2.60 per share, versus the consensus estimate of $2.52. The company also expects revenues to increase 10% year/year to approximately $2.23 billion, slightly below analysts' estimate of $2.27 billion. Based on current expectations, CECO is trading at 13.5x forward earnings, compared with its peers Corinthian Colleges (COCO) at 23.7x and ITT Educational Services (ESI) at 23.1x. With legal troubles and regulatory investigations behind the discounted valuation, we continue to favor ITT Educational Services within the educational services space.
--Richard Jahnke, Briefing.com
12:29 pm Expedia (EXPE)
20.40 -3.85: Expedia on Wednesday said its fourth quarter profits declined 43% from a year ago, amid a fiercely competitive environment and headwinds in the hotel and airline industries. Based on the disappointing results, Expedia shares plunged more than 19% during the regular trading session.
Although we touted the company's growth prospects last month, given its strong portfolio of brands and international expansion efforts, the latest results have skewed our near-term outlook. With increasing overhead costs and continued industry pressures weighing on the stock, we believe it best that investors refrain from committing new money at this time.
The travel services company, whose businesses include Expedia.com, Hotels.com, HotWire, and TripAdvisor, earned $25.2 million, or $0.07 per share, in the latest period, down from $44.1 million, or $0.13 per share, a year earlier. Setting aside certain costs and one-time items, earnings were $0.20 per share - five cents below the Reuters Estimates consensus of $0.25.
Expedia's revenues increased 13% during the quarter to $494.7 million, led by increased worldwide merchant hotel revenue, acquisitions, and growth in its rental car business. Domestic revenue rose 8%, while international revenue increased 30%. That, however, was a lower growth rate compared with the previous three quarters and reflects the continued challenges in the travel environment in Europe, particularly in the UK, and the impact of foreign exchange. Meanwhile, gross bookings increased 17% in the fourth quarter, with domestic and international booking up 14% and 31%, respectively.
Gross profit for the period was $385 million, up 12% from a year earlier. However, the company said gross margin was down 33 basis points to 77.7% due to the inclusion of lower gross margin revenue from an acquired travel destination services company. Excluding that acquisition, gross margin would have increased 45 basis points.
--Richard Jahnke, Briefing.com
12:21 pm Target (TGT)
55.08 -0.72: For its fourth quarter, Target reported $939 million in earnings from continuing operations, or $1.06 per share. According to Reuters Estimates, analysts' average earnings estimate was $1.05. Versus the year-ago period, Target's result translates to about 18% year-over-year EPS growth. Revenues rose 11.5% to $16.9 billion, with comparable store sales up 4.2%.
For the full-year, the retailer reported $2.71 in profit per share - two cents ahead of the consensus estimate. Over the year, comparable store sales rose 5.6% and drove 12.3% top line growth. A strong contribution from its credit card business also benefited the top line. Management noted that several factors, namely lower transition services income from discontinued operations and higher utilities expense, resulted in its higher expense rate. Still, its full-year operating margin expanded 53 basis points to 8.22%. Improvements in markup and shrinkage helped Target's gross margin expand 75 basis points to 33.62%. On its conference call, management said that "trees do not grow to the sky," and alluded to the fact that its pharmacy business, which continues to enjoy double-digit rates of same-store sales growth, has a sharply lower gross margin rate than Target's other units.
Target did not issue specific profit guidance. On its conference call, management indicated that it expects the company to continue to achieve profitable market share gains and that it expects to grow revenue at 2-3 times the marketplace's aggregate growth rate of 4-5%. Management further added that EPS is expected to grow somewhat faster than revenue at a rate that is "likely consistent with [the] long-term average annual mid teens percentage growth objective." Comparable store sales are forecasted to rise 4-6%. Gross margin is expected to hold relatively flat. According to Reuters Estimates, analysts are anticipating $3.10 in full-year EPS, which translates to 14.4% year-over-year growth.
Under its share repurchase program, Target bought back $300 million in common stock during the last quarter. For the year, the retailer repurchased about $1.2 billion in stock and it was noted that Target plans to repurchase the balance of its current $5 billion program over the next two to three years. Since the release of its prior earnings report, TGT shares have declined just over 5%. The company's shares trade at 20.2x trailing twelve month earnings, a discount to their 23.1x historical average.
Separately, Target previously reported that January comparable store sales increased 5.2%, well above the industry's 2.3% rise. Rival Wal-Mart (WMT), which will report its fourth quarter results next Tuesday, trades at 18.2x trailing twelve month earnings. Its Q4 result is expected to reflect 10.7% year-over-year EPS growth.
--Lisa Beilfuss, Briefing.com
10:29 am XM Satellite Radio (XMSR)
24.11 -1.14: XM Satellite Radio on Thursday said its fourth quarter loss widened from a year ago, as it recorded higher subscriber acquisition costs and marketing expenses during the period. Additionally, it said that Pierce Roberts, a company director, has resigned from the board because he was "troubled by the current direction of the company." Shares of the company, in turn, have slipped in early trading.
The company reported a loss of $270.4 million, or ($1.22) per share, for the most recent quarter. That compares with a loss of $190.4 million, or ($0.93) per share, in the year-ago period. According to Reuters Estimates, analysts were looking for a loss of ($0.92) per share. Meanwhile, subscriber acquisition costs climbed to $89 from $64 a year earlier, due in large part to higher marketing expenses to meet a one-time competitive event in the quarter, which offset strong top-line growth.
Total revenue for the period was $177 million, a 113% increase over the $83.1 million reported last year. The increase was driven by significant subscriber growth, as well as higher average revenue per subscriber with respect to the company's price increases. During the quarter, XM Satellite had 898,315 net subscriber additions, ending 2005 with approximately 5.93 million total subscribers. Furthermore, the company said later than expected activations from strong holiday sales brought that total to more than six million during the first week of January.
Given the strong results for the fourth quarter and fiscal 2005, XM Satellite expects to surpass 9 million subscribers by year-end and reach more than 20 million subscribers by 2010. The company also projected subscription revenue of $860 million for fiscal 2006 and expects to achieve positive cash flow from operations this year.
With the company, as well as rival Sirius Satellite Radio (SIRI), aggressively investing in programming and marketing initiatives to drive subscriber growth, it continues to incur large losses. As these investments, including the deal last week wiith Oprah Winfrey to launch a new satellite channel called "Oprah & Friends," continue to weigh on the bottom line, we would remain on the sidelines until the profit outlook becomes clearer.
--Richard Jahnke, Briefing.com
09:57 am J.C. Penney (JCP)
58.24 +1.61: Checking in eight cents ahead of analysts' expectations, J.C. Penney reported a profit from continuing operations of $1.71 per share for its fourth quarter. That figure excluded a $0.21 one-time tax benefit, primarily from the elimination of state tax valuation allowances. The company's top line rose 4.2% to $6.2 billion, with comparable department store sales up 2.6%. Management noted that sales were best in the southeast and western parts of the country. Direct sales (catalog and internet) rose 3.7%, fueled by a 22% jump in internet sales.
For the fiscal year, the company delivered $3.63 in earnings per share. That result also excludes the aforementioned tax gain, and surpassed the consensus estimate by eight cents. Full-year sales increased 3.8% to $18.8 billion.
The department store's chief executive asserted that the company's full-year performance demonstrates its progress in executing its Long Range Plan objective. The plan, launched in 2005 and spanning until 2009, centers on four strategies. Some of J.C. Penney's initiatives during the year included the introduction of new brands like nicole by Nicole Miller, W - Work to Weekend, and Studio, as well as 18 new stores. In addition, J.C. Penney launched the rollout of a new system that reduces transaction time.
Management said that it recognizes short-term disruptions may be caused by industry consolidation, and that higher energy prices and changes to consumer credit payment terms continue to face its core customer. With respect to the current year, the company anticipates earnings of $4.14-4.24 per share. That range brackets the consensus estimate of $4.20. Comparable store sales are expected to grow in the low-single digits and direct sales should rise in the low to mid-single digits. For the current quarter, the department store forecasts EPS in the area of $0.80, two cents higher than analysts' average estimate.
Separately, J.C. Penney authorized a new $750 million stock repurchase program and also announced a 44% increase in its annual dividend to $0.72 per share. These initiatives, management said, demonstrate the Board's confidence in the company's longer-term prospects. During 2005, the company increased shareholder value by buying back $2.2 billion in stock. JCP shares presently trade at 13.9x estimated full-year earnings. Its shares are priced at a discount to those of competitors Kohl's (KSS), Sears Holdings (SHLD), and Federated (FD). Its valuation also represents a discount to the Consumer Discretionary sector's 16.9x forward earnings multiple.
--Lisa Beilfuss, Briefing.com
09:43 am Goodyear Tire (GT)
15.13 -0.31: Goodyear Tire & Rubber reported a loss in the fourth quarter on sales of its farm tire unit and other asset sales, as hurricanes and higher costs weighed on the quarter. The largest tire maker in the US reported a net loss of $51 mln, or 29 cents per share. The quarter was a mess with a slew of one-off items, from a favorable tax adjustment, hurricane costs, supplier settlements, and assets sales, impacting quarterly results. Even though the comparable figure of 18 cents missed consensus by four cents, the takeaway really should be that the company is taking the necessary steps to turn around and refocus its business.
Goodyear reassured investors that its fundamentals "remain sound" despite headwinds of rising raw material costs and currency fluctuations. Materials costs escalated 13% in the year, which includes a 21-year high of $2 a kilogram for rubber prices over the last two months, which GT combated by selling more premium tires. Revenues in the quarter grew only 2% year/year to $4.93 bln. North American tire sales rose 4% to $2.29 bln with operating income growing 48% to $43 mln. Operating margins improved 60 basis points to 1.9%.
GT's woes are well known from energy and raw material costs, to pension liabilities, a struggling auto industry, impending union negotiations, and currency fluctuations. Nevertheless, the company has been able to lower its debt-to-cash flow levels and improve yearly profits. Earnings are expected to grow 16% and 10%, respectively, over the next two years. GT is trading at a multiple of 10x current earnings.
--Kimberly DuBord, Briefing.com
09:14 am Network Appliance (NTAP)
31.16: Shares of Network Appliance traded sharply higher in pre-market action, gaining more than 9%, after the company reported third quarter profits rose 27% from a year ago, driven by strong demand for its network storage products. The Sunnyvale, California-based company also issued guidance for the fourth quarter and full year that was largely in line with Wall Street's estimates.
For the third quarter, Network Appliance said net income increased to $76.4 million, or $0.20 per share, from $60.1 million, or $0.16 per share, a year earlier. Excluding restructuring costs, stock options, and other one-time items, earnings were $84.7 million, or $0.22 per share - a penny better than the Reuters Estimates consensus of $0.21. Revenue for the period grew 30.1% year/year to $537.0 million. That topped the consensus estimate of $524.69 million. Gross margin, meanwhile, was 60.9%, slightly below the consensus estimate of 61.8% and last year's 61.1%.
Looking to the fourth quarter, Network Appliance expects earnings to be in the range of $0.22 to $0.23 per share, ex-items, on revenue growth of 28% to 30%, or about $578.6 to $587.6 million. Analysts are forecasting EPS of $0.22 on revenue of $572.71 million, according to Reuters Estimates. For the full year, the company said earnings are expected to be between $0.80 and $0.81 per share, ex-items, versus the consensus estimate of $0.79 per share. It also estimates full year revenue growth of 28% to 30%, or about $2.05 to $2.06 billion, compared with the consensus estimate of $2.03 billion.
Breifing.com currently has an Overweight rating on the Technology sector, but we remain focused on the consumer and communication end markets, as opposed to network storage companies like Network Appliance.
--Richard Jahnke, Briefing.com
09:07 am Baker Hughes (BHI)
66.17: The Oil Services Index (OSX) has been crushed lately due to declining energy prices. Well-stocked inventories have driven oil below sixty dollars per barrel, which could go even lower if fundamentals, and not concerns over Iran's nuclear program, remain the market's focus. Seasonally, this is the weakest time of the year for the energy sector as prices temper with traders looking ahead to warmer temperatures in the North Hemisphere. While lower energy prices will weigh on stocks, the fundamentals for the oil service industry remain on track, underscored by ramping exploration and production drilling activity across the global energy patch.
Baker Hughes, the world's third largest oilfield services provider, reported pro forma earnings of 75 cents per share, a penny ahead of consensus. Revenues in the fourth quarter rose 19% year/year to $1.99 bln versus the $1.91 bln consensus estimate. All divisions reported record operating profits in the quarter. Operating margins, excluding WesternGeco, expanded 220 basis points year/year and another 70 points from last quarter to a record 21.2%. Baker's record quarter was driven by North American land drilling, Gulf of Mexico offshore operations, and strong international markets led by exceptional results in Middle East, Saudi Arabia, and Asia, in particular growth markets China and India.
Baker Hughes stated its outlook for 2006 and 2007 remains "very positive" as producers have ramped E&P budgets to satisfy global demand for oil and natural gas. Its full year outlook is well above what the market had been forecasting. It forecasted EPS in a range of $3.45-3.66 on revenues of $8.55-$8.69 bln versus consensus estimates of $3.45 per share and $8.36 bln, respectively. BHI's results further support our bullish view on the industry. We suggest investors take advantage of weakness, prompted by lower energy prices, to add to positions of favored names. At 19x earnings, the risk/reward for BHI remains quite attractive as the company is expected to grow earnings by 34% and 20% through 2007.
--Kimberly DuBord, Briefing.com
08:18 am Applied Materials (AMAT)
20.97: Applied Materials not only beat first quarter earnings projections on greater than 20% order growth, but guided up second quarter projections as well, indicating greater cycle strength. It now sees orders up 15-20%, an increase from its previous estimate of 7-10%. Revenues are expected to rise 13-15% sequentially with earnings in a range of 22-23 cents per share. Pro forma earnings for Q1 were 19 cents per share - two cents ahead of expectations with revenues also coming in ahead, up 4.3% year/year to $1.86 bln. The Santa Clara-based company enjoyed broad-based strength by product and by geographical region for high volume production and leading edge 65nm and 45nm chip development programs.
Applied Materials' earnings and guidance continues to support our positive stance on the semiconductor capital equipment industry in 2006. The stock has lagged its global peers, but we would expect this variance to narrow. Supportive factors for solid a spending cycle include rising capex plans by top five global buyers, including IDMs, and what we view as good barometers for the entire industry, the Taiwanese foundries. Both United Microelectronics (UMC) and Taiwan Semiconductor (TSM) reported record revenues and higher utilization rates in the fourth quarter. We expect these companies will increase capex in the first half of the year due to tight utilization of advanced process technologies.
--Kimberly DuBord, Briefing.com
08:15 am Hewlett-Packard (HPQ)
31.67: Hewlett-Packard has done a lot of heavy lifting after Mark Hurd took over in March. The company has rapidly restructured its businesses, the benefits of which have come to fruition much faster than many on Wall Street expected. The street is playing catch-up this morning after the company reported pro forma earnings rose 30% to $0.48 per share - four cents ahead of expectations. Revenues grew by almost 6% to $22.7 bln driven by broad-based portfolio strength.
The world's largest printer maker's PC and printing units drove the upside, sending shares higher in the after-hours. PC profits doubled to $293 mln on an 8.4% increase in sales, highlighted by a 26% jump in notebooks, widening profit margins by 180 basis points year/year to 3.9%. Hewlett's strong quarter and raised Q2 guidance sets the stage for its main rival, Dell Computer (DELL), which releases results tonight after the close. With its competitor now clearly back in the game, Dell's guidance will be critical in the outlook for the PC market.
--Kimberly DuBord, Briefing.com
10:09 am Northern Border: RBC Capital Mkts reiterates Sector Perform. Target $44 to $44. Firm is saying after over a year of waiting, Northern Border Partners announced that it is purchasing $3 bln in assets from ONEOK (OKE). This is a much larger transaction than the firm thought would happen ($800 million to $1.2 billion).
10:08 am Celebrate Express: CIBC Wrld Mkts downgrades Sector Outperform to Sector Perform. Downgrade follows the CEO's resignation & reduced 2H06 EPS guidance. While they believe demand trends remain strong, ongoing cost issues and the departure of two sr in six mos suggest a less bullish near term view on the stock is appropriate.
10:01 am Honeywell: CIBC Wrld Mkts upgrades Sector Perform to Sector Outperform. Target $40 to $40. Firm believes HON's major portfolio moves are largely behind them, with solid visibility into strong late cycle businesses (2/3 of portfolio) - with leverage to Aerospace (~40% of sales), Nonresidential markets (~20% of sales) and Oil & Gas (~10% of sales). They say the key to upside performance will be greater than expected margin expansion at Aerospace (they are modeling 18.5% for '07E, last peak ~20%). Firm thinks strong execution on margin at ACS is another potential trigger, and solid '07E FCF yield limits downside.
09:59 am General Motors: Bernstein downgrades Outperform to Mkt Perform. Target $35 to $35. Downgrade is due to the likely overhang of labor threats through 2006 and 2007, the exhaustion of catalysts and the inability to release cash from GMAC to shareholders. They say the market discounts a 20%-- 30%chance of bankruptcy by 1Q:08 -- which wthey believe is appropriate given labor overhang through 2007 contract negotiations.
09:59 am Office Depot: Prudential reiterates Underweight . Target $20 to $20. Firm ups target following results. The firm says ODP reported better-than-expected results, however, they are not convinced this is sustainable. Furthermore, at 21x their 2006 estimates, they believe the stock is already discounting a turnaround as reality, and they suggest investors wait for a more attractive entry point.
09:57 am Photronics: Am Tech/JSA Research downgrades Buy to Hold. Firm is citing valuation and limited visibility, as the stock has reached their $20 tgt. They say business visibility remains limited due to the inherent rapid turns in the photomask business. Additionally, firm thinks the ramp in the co's new facilities in Taiwan and China could have a near-term drag on gross margin expansion. They also think the 20-25% tax rate could rise towards the high end of the range this year due to increasing revenue in the U.S. region, which could also limit margin leverage.
09:55 am Daktronics: Janco Partners reiterates Buy. Target $38 to $38. Firms ups price target following Q3 results that were essentially in line with their expectations.
09:54 am Callaway Golf: Wedbush Morgan reiterates Buy. Target $18 to $18. Firm is saying an upbeat analyst day provided a bullish 3-year growth outlook. The firm thinks additional opportunities for gross margin expansion include product mix shift and production outsourcing. They see potential upside from facilities consolidation and/or real estate divestitures.
09:53 am SonoSite: AG Edwards reiterates Buy. Target $39 to $39. Firm is saying MicroMaxx still seems to be humming along, and Titan positively surprises them. They expect lower than anticipated costs for FY06 despite higher R&D investments.
09:48 am Xenoport: Punk, Ziegel & Co initiates Buy. Target $24. Firm expects that Phase II clinical data on XP'986 and possible corporate partnerships for XP'512 and/or XP'986 will be the primary drivers of the stock for the next 12-18 months. |
