Banc of America Securities Morning Viewpoints for 3/6/01
03/06/01 07:07 AM
Source: Banc of America Securities
Banc of America Securities reduces their price target for Triquint Semiconductor to $20 from $40 after the company announced an expected shortfall in profit for 2001. The brokerage firm also covers Applied Micro Circuits, Cisco Systems, Nortel Networks and PMC Sierra. Catch the action in today's Banc of America section of our broker center.
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APPLIED MICRO CIRCUITS CORPORATION* (AMCC)
BUY
Price: $29.19 Target Price: $55 Mkt. Cap.: $8,925.5 MM FY01E: $0.49 FY02E: $0.39 FY03E: $0.52
Reducing Estimates, Downgrading to Buy from Strong Buy
AMCC’s exposure to Cisco and Nortel, 10% and 18% customers respectively, adds to near term visibility problems.
In addition, we believe that its fab burden could put pressure on our gross margins estimate given lower loading conditions.
We are reducing our March quarter 2001 EPS estimate to $0.09 from $0.11.
CISCO SYSTEMS, INC.* (CSCO)
BUY
Price: $23.08 Target Price: $35 Mkt. Cap.: $174.4 BB FY00A: $0.54 FY01E: $0.60 FY02E: $0.70
Downgrading; Reducing Estimates
We are reducing our fiscal 2001 and 2002 EPS and revenue estimates for Cisco Systems due to our waning confidence in the recovery of a number of key industry and macroeconomic trends.
We are lowering our fiscal 2001 and 2002 EPS estimates to $0.60 and $0.70 from $0.63 and $0.75, respectively, we are downgrading Cisco Systems to Buy from Strong Buy in order to reflect our more cautious 2H01 outlook and reduced estimates.
KNIGHT TRDNG GRP, INC.* (NITE)
BUY
Price: $16.88 Target Price: $30 Mkt. Cap.: $2,133.0 MM FY00A: $2.04 FY01E: $1.60 FY02E: $1.90
Knight Trading Recap of First Analyst Day; Not Backing Away in a Bad Market
Knight Trading held its first analyst day in New York yesterday, we believe the meeting was well received and was an important show of confidence in a bad market environment.
The company didn’t talk down its $0.32 to $0.40 1Q01 EPS guidance nor did it back away from its target of breaking even in Europe by the end of the year, assuming a “kinder” operating environment in March, management indicated its guidance would still stand.
MACROMEDIA, INC.* (MACR)
MARKET PERFORMER
Price: $27.50 Target Price: N/A Mkt. Cap.: $1,562.0 MM FY01E: $0.98 FY02E: $1.07
MACR: Pre-Announces FY4Q01 Revenue Shortfall; Downgrade to Market Performer
Macromedia announced after the close yesterday that it expects FY4Q01 March revenue for stand-alone Macromedia to be in the $85-90 million range, or roughly flat year over year.
This guidance represents a 10-15% shortfall relative to our previously modeled revenue of $100 million, the shortfall reflects a general slowdown in demand and not a product specific issue that we can decipher.
NORTEL NETWORKS CORPORATION (NT)
BUY
Price: $17.60 Target Price: $26 Mkt. Cap.: $56.8 BB FY00A: $0.74 FY01E: $0.45 FY02E: $0.58
Reducing Estimates
We are reducing our fiscal 2001 and 2002 EPS and revenue estimates for Nortel Networks due to our waning confidence in the recovery of a number of key industry and macroeconomic trends.
We are lowering our fiscal 2001 EPS estimate to $0.45 from $0.75 and are establishing a $0.58 fiscal 2002 EPS estimate.
We believe that the current slowdown of North American carrier spending, as well as reduced IT budgets, will likely lead to a longer-than-anticipated transitional period before the resumption of normalized growth for large cap names such as Nortel.
PMC-SIERRA, INC.* (PMCS)
BUY
Price: $37.94 Target Price: $90 Mkt. Cap.: $6,988.1 MM FY00A: $1.03 FY01E: $0.55 FY02E: $1.00
Downgrading PMC-Sierra from Strong Buy to Buy
Due to continued broadbased slowing of end market demand for broadband communications equipment and exposure to Cisco in the high 20% range resulting from aggressive acquisition strategies by both PMC-Sierra and Cisco, we are downgrading PMC-Sierra from a Strong Buy to a Buy rating.
We continue to believe that PMC-Sierra remains superiorly positioned to outperform when macro conditions improve, but until that time when we expect Cisco will have cleared its inventory levels PMC-Sierra could perform at below trend-line growth levels established at the end of 1999.
TRIQUINT SEMICOND., INC.* (TQNT)
BUY
Price: $19.00 Target Price: $20 Mkt. Cap.: $1,645.4 MM FY00A: $0.82 FY01E: $0.52 FY02E: $0.63
TQNT: Wireless, Optical Slowdown Catches Up; Reducing Estimates; $20 Price Target
TQNT to fall short of guidance for March quarter and full year 2001, citing order pushouts in optical business (30% of sales) as primary cause, wireless (50% of sales) slightly below plan.
Company now expects 2001 EPS at $0.61 on sales of $330 mm, versus $1.00 on $411 mm, previously, revenues expected to be flat q/q for June and Sept., with return to sequential growth in Dec.
Maintain Buy; Reducing target price to $20 from $40, our new target reflects 32x our CY02 EPS estimate of $0.63.
* Banc of America Securities LLC currently maintains a market in this security. Banc of America Securities LLC was co-manager of a public offering for this company in the last three years.
AEROFLEX INCORPORATED* (ARXX)
BUY
Price: $12.19 Target Price: $40 Mkt. Cap.: $750.8 MM FY00A: $0.30 FY01E: $0.43 FY02E: $0.52
Reducing Estimates and Reiterating Buy
We believe Aeroflex’s exposure to Teradyne, Nortel and Lucent is currently impairing near-term visibility along with that of its peers.
We are reducing our calendar 2001 revenue and EPS expectations for Aeroflex to $241.8 million and $0.48 from $295 million and $0.62, respectively.
ANAREN MICROWAVE, INC.* (ANEN)
BUY
Price: $17.97 Target Price: $25 Mkt. Cap.: $425.9 MM FY00A: $0.49 FY01E: $0.72 FY02E: $0.84
ANEN: Pre-announces March Shortfall; Lower Estimates; Reduce Rating to Buy
Conf. call Tuesday, 3/6, at 5:30am PDT. Dial-in #: (800) 450-0788.
Anaren pre-announced a revenue and earnings shortfall for March (3Q01) after close yesterday, company now expects March EPS of $0.12-0.14 on sales of $22-24 million vs. our $0.18 EPS estimate on $26.0 million. No further guidance was given.
The company cited general economic softness with slower spending among wireless carriers.
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