Analyst Actions: Yahoo, VMware, Edwards Lifesciences

From Standard & Poor's Equity Research

CREDIT SUISSE DOWNGRADES YAHOO TO NEUTRAL FROM OUTPERFORM

Credit Suisse analyst Heath Terry says Yahoo's (YHOO) first quarter results are generally in line, so he keeps his pro-forma forward EPS estimates intact. He still believes Yahoo will aggressively fight any bid from Microsoft (MSFT) and sees very little likelihood of Microsoft raising its current bid in absence of other serious bidders for the asset.

Terry says, with Yahoo likely to continue to drag its feet on any deal with Microsoft, risk of a long regulatory approval process before the deal can close, and little chance of a higher offer coming from either Microsoft or another bidder, he downgrades Yahoo.

However, he raises 26 price target to 30, which reflects the value of the proposed deal, vs. his estimated value of Yahoo on standalone basis.

JEFFERIES RAISES TARGET, KEEPS BUY ON VMWARE

Jefferies analyst Katherine Egbert says VMware's (VMW) revenue and pro forma EPS of $438 million and $0.22 were above her estimates. She notes license revenue was $294 million, up 73% year-over-year, while service revenue increased 62% from a year ago.

Egbert believes that a strong quarter marked by better than expected revenue, deferred revenue and billings, as well as a ramp in enterprise license agreements (ELAs) should somewhat ease fears that the looming entry by Microsoft may be profoundly impacting customer purchase decisions. While VMW is not completely immune to macroeconomic conditions, she thinks its themes of costs savings and improved ROI from virtualization position it well for the current environment.

She raises her 55 price target to 70.

CREDIT SUISSE UPS ESTIMATES, TARGET FOR EDWARDS LIFESCIENCES

Credit Suisse analyst Kristen Stewart says Edwards Lifesciences (EW) blew through her and consensus first quarter EPS and transcatheter valve (TCV) sales estimates. She says TCV first quarter sales were $8.1 million (about $7 million in EU, $1 million from U.S. trial), compared to $2 million in the fourth quarter 2007 and her $3 million estimate.

Stewart notes that EW raised its full year expectations to more than $35 million from $20 million. She sees the first quarter as just one of many catalysts to come in 2008 that should lead to p-e expansion as the market begins to appreciate long-term earnings power of TCV. She notes with outstanding TCV first quarter sales, PARTNER trial timelines reaffirmed, she has greater confidence in the story.

She raises $2.36 2008 EPS estimate to $2.52 and $2.78 for 2009 to $2.90. She hikes 62 price target to 70. She reiterates outperform opinion on the stock.