BERNSTEIN RAISES ESTIMATE, REITERATES OUTPERFORM ON APPLE
Bernstein analyst Toni Sacconaghi notes although Apple's (AAPL) growth decelerated meaningfully from the last quarter, first quarter revenues are healthy relative to expectations, particularly on iPods; this, combined with very strong gross margins, drove significant EPS upside ($1.78 vs. $1.38; his $1.47 forecast).
Sacconaghi notes that Mac and iPhone unit sales were largely in line with consensus. He raises $5.04 fiscal year 2009 EPS (September) estimate to $5.50 largely on first quarter beat and higher revenue.
He says AAPL valuation remains very attractive: excluding cash balance of $31 per share, it trades at 12 times his fiscal year 2009 GAAP estimate and 9 times non-GAAP forecast. He keeps $135 price target.
DEUTSCHE BANK CUTS TARGET FOR EBAY
Deutsche Bank analyst Jeetil Patel notes while eBay (EBAY) beat on EPS, every other metric came in weaker than expected: gross merchandise volume fell 16% year-over-year, revenue fell 7%, and operating profits declined 12% year-over-year.
Patel says the unwind of model started as top-line declines likely affect profits due to fixed costs. With no improvement in its business to date, he thinks EBAY should move to fixing issues that have been building for years, including: increasing demand, lower seller commissions, re-investing in buyer interface.
He cuts $1.46 2009 pro forma EPS estimate to $1.40, $13 target to $11. He reiterates sell.
MORGAN STANLEY SEES AFLAC EXPOSURE TO EUROPEAN FINANCIALS ESCALATING RISK
Morgan Stanley analyst Nigel Dally says Aflac (AFL) has $7.9 billion of exposure to hybrid securities. He estimates about 80% of this exposure is to European financial services companies, with Royal Bank of Scotland Group (RBS), Barclays (BCS) and HBOS among its holdings.
Dally says hybrid security prices related to these firms have fallen sharply in the past week, as investor concerns over the possibility of nationalization of some firms has led many of these securities to decline 30% or more to well below $0.50 on the U.S. dollar.
If even a small portion of these losses are realized, he thinks the hit to AFL's capital ratios could be substantial. He keeps an equal weight opinion on the stock.
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