$43 new target by Brown Bros.
Compaq Sets High After Brown Brothers Analyst Raises Target Price
Dow Jones Online News, Monday, December 07, 1998 at 19:57
By Maria V. Georgianis, Staff Reporter
NEW YORK -(Dow Jones)- Compaq Computer Corp. set a 52-week high
Monday after a Brown Brothers Harriman Inc. analyst raised his 12-month target price to $43 from $38.
Compaq Computer (CPQ) closed at $41.688, up $3.125, or 8%, on volume of 30 million, compared with average daily volume of 13.8 million. The rise dovetailed with the record high closing of the Nasdaq market.
Earlier Monday, Compaq's shares traded at a 52-week high of $41.938; the shares' previous 52-week high of $38.75 was set Friday.
Analyst Bill Milton said he upped his price target because the
company's stock was attractive relative to rising valuation of the
computer hardware and technology sector. Milton said he maintained his
fourth-quarter 35 cents a share earnings estimate and his 1999 estimate of $1.75. In the year-ago quarter, Compaq earned 42 cents.
Analysts expect Compaq to earn 46 cents a share in 1998, according to the mean estimate of analysts surveyed by First Call. The company has earned a total of 10 cents a share in the first three quarters.
Brown Brothers' Milton said there is "upside potential" to his 1999
earnings estimate of $1.75 a share. Milton said he has been conservative in his estimation of Compaq's expense reductions in its Digital Equipment unit, as well as in its revenue performance. He has also conservatively estimated Compaq's revenue and margins from its core PC business.
The company recently said that its 1999 tax rate could be 30% to 32%, up from the 26% rate that he had anticipated, Milton said. The company said any negative effect from the higher tax rate could be offset by revenue and margin improvements.
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