Analyst Picks and Pans

Analyst Picks and Pans: Oracle, Pier 1, Immunogen


Oracle (ORCL)

Oppenheimer maintains perform

Oppenheimer analyst Brad Reback said on Sept. 17 that after navigating the economic meltdown quite well, reduced demand and a lack of acquisition activity caught up with Oracle. He noted that the company's first quarter earnings per share (EPS) of $0.30, posted after the close of trading Sept. 16, was in line with expectations, but its $5.06 billion in revenue missed the $5.25 billion consensus forecast. Most surprising to Reback, the technology business experienced the greatest weakness as the company indicated its ISV resellers (including SAP) are reselling fewer Oracle databases.

Reback said that while Oracle continues to deliver on the margin front, given the complexity of its pending Sun Microsystems (JAVA) deal, and the premium at which its shares trade vs. Microsoft (MSFT), he prefers Microsoft. He sees Oracle's fiscal 2010 (ending May) EPS at $1.51.

Pier 1 Imports (PIR)

Raymond James reiterates strong buy

Raymond James analyst Budd Bugatch said on Sept. 17 that Pier 1 reported a second-quarter adjusted loss per share of $0.16, which was ahead of his $0.25 loss forecast and the Wall Street consensus estimate of a $0.22 loss. Bugatch noted that Pier 1's merchandise margins were 52.0% in the second quarter, up 270 basis points year-over-year and better than his expectation of 51.3%. The analyst said Pier 1 stated it expects to see continued and significant improvement in merchandise margins vs. last year, and anticipates a stronger sales trend in the third and fourth quarters.

Importantly, Bugatch noted that management said the company is generating positive same-store sales thus far in September. He kept his $4 price target.

Immunogen (IMGN)

Oppenheimer keeps outperform

Oppenheimer analyst Bret Holley said on Sept. 17 that there is a rapidly growing recognition of the value of Immunogen's platform technology, and the licensing deal with Amgen (AMGN) enhances this value. He noted that Immunogen has licensed to Amgen exclusive rights to use its maytansinoid Targeted Antibody Payload (TAP) technology for development of antibody-drug conjugates (ADCs) to an undisclosed solid tumor target. Holley also noted that Roche and other major pharma companies already collaborate with Immunogen to develop TAP-enabled ADCs.

Holley expects to see more TAP collaborations in the near term. He maintains his $12 12-18 month target on Immunogen.

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