Analyst Picks and Pans

Analyst Picks and Pans: Nike, Exide, Kenexa


Nike Inc. (NKE)

R.W. Baird upgrades to outperform from neutral

Baird analyst Mitch Kummetz said on June 5 he believes the shift in foreign exchange could represent a low single-digit swing in the company's fiscal 2010 (May) sales outlook. Kummentz says that given Nike's hedging strategy, he expects the impact to be less material on EPS, but the further out one looks, the more significant its becomes, and he thinks fiscal 2011 is less hedged than fiscal 2010 at this juncture. He also remains encouraged that athletic footwear continues to trend relatively well, and thinks Nike brands continue to take market share.

Kummnetz raised his $3.52 fiscal 2010 earnings per share (EPS) estimate to $3.60, and his $3.89 fiscal 2011 forecast to $4.04. He raised his $61 target price to $69.

Exide Technologies (XIDE)

Merriman Curhan downgrades to neutral from buy

Merriman Curhan analyst Craig Irwin said on June 5 that Exide reported fourth-quarter revenue and operating EPS of $654 million and $0.03, vs. his estimates of $787 million and $0.20. He noted that a revenue decline of 36.5% included a 9.9% fall in pricing, 20.6% lower unit volumes, and a 6.0% currency headwind. Irwin said the difficult fourth-quarter results were largely the result of a Transportation-ROW segment shortfall, where gross margins fell into the mid-single-digits. He believes choppy execution on restructuring plans will continue to cloud progress across the company.

Irwin cut his $1.20 fiscal 2010 (March) EPS estimate to $0.65.

Kenexa Corp. (KNXA)

Cowen upgrades to outperform from neutral

Cowen analyst Peter Goldmacher said on June 5 he is raising his $0.61 2009 EPS estimate, on $152 million in revenue, to $0.66 on $156 million, above the analyst consensus forecast of $0.63 on $153 million; he raised his $0.70 2010 EPS estimate on $162 million in revenue to $0.83 on $169 million, above the consensus view of $0.80 on $164 million.

Goldmacher notes that Kenexa is trading at 1.5 times enterprise value/sales, a compelling entry point for small-cap growth investors willing to invest in HR outsourcing on the thesis unemployment is in the early stages of normalizing and large companies will outsource an increasing amount of HR functions as hiring trends stabilize. He believes the consensus estimates are overly conservative.


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