Analyst Actions: Affymetrix, Emulex, Avnet

From Standard & Poor's Equity Research

BEAR STEARNS DOWNGRADES AFFYMETRIX TO UNDERPERFORM FROM OUTPERFORM

Bear Stearns analyst Stephen Unger says he does not think Affymetrix's (AFFX) revised revenue forecasts are low enough; sees ongoing investor uncertainty. He cuts his 2008 revenue estimate by $45 million to $377 million and 2009 forecast by $74 million to $402 million.

Unger says, though the company cites "expected lower research in spending by pharmaceutical and other customers," he believes that the reason for the lowered forecast is company-specific and focused on the sales of mature gene expression products. He sees only limited room for 2008 operating expense reduction, and expects revenue growth and profit uncertainty to linger for several quarters.

He cuts $0.50 2008 EPS estimate to $0.26 and $0.70 for 2009 to $0.35. He cuts 28 price target to 12.

CITIGROUP DOWNGRADES EMULEX TO SELL FROM BUY

Citigroup analyst Paul Mansky says March faded during the last week for most storage companies, which spilled into April. He notes that beyond specific shocks (Bear Stearns (BSC) "take-under"), there has been general elongation of sales cycles at the higher end of the market, which now often requires elevation to upper management for approval -- many of which are being "tabled."

Mansky says improved utilization rates via server virtualization, de-duplication and thin provisioning allow IT staff to do more with less. He notes indications are now that economic crisis impacting verticals outside of Financial Services as well as geographies outside of the U.S. He sees widespread estimate risk across his coverage.

For Emulex (ELX), he cuts 20 price target to 12.

RAYMOND JAMES DOWNGRADES AVNET TO OUTPERFORM FROM STRONG BUY

Raymond James analyst Brian Alexander says his downgrade of Avnet (AVT) is based on this morning's negative preannouncement in which management reported both third quarter and preliminary fourth quarter EPS guidance that is approximately 11% below current consensus. While he still sees changing semiconductor industry dynamics driving improving cash flow and higher ROIC longer term, he thinks this thesis has been interrupted by macroeconomic weakness and supplier rebate shortfalls.

As a result, Alexander says margins have compressed more than he expected, and believes this reduces the urgency to own Avnet shares in the short run. He says he will provide revised estimates, updated price target following 11:00 am conference call.