Baird Upgrades Resources Connection

Analyst Mark Marcon says fourth-quarter earnings per share and revenue was much better than expected

Resources Connection (RECN ) reported fourth-quarter earnings per share of 31 cents. Baird upgraded the stock to outperform from neutral.

Analyst Mark Marcon says fourth-quarter EPS and revenue was much better than expected, driven primarily by increasing client penetration, which more than made up for the expected Sarbox run-off. He raised his 94 cents fiscal year 2006 (May) EPS estimate to $1.30. He initiated a $1.46 fiscal year 2007 EPS estimate.

Given increased estimates and diminished concerns regarding post-Sarbox run-off, he upgrades to outperform, Marcon says. He has a $34 price target, based on his conservative discounted cash flow analysis, which implies 25 times next 12 months EPS (cash adjusted).

All of the views expressed in this research report accurately reflect the research analyst's personal views regarding any and all of the subject securities or issuers. No part of analyst compensation was, is or will be, directly or indirectly related to the specific recommendations or views expressed in this research report.
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