http://www.businessweek.com/stories/2007-11-15/s-and-p-picks-and-pans-oracle-nyse-qualcomm-j-dot-c-dot-penneybusinessweek-business-news-stock-market-and-financial-advice

Markets & Finance

S&P Picks and Pans: Oracle, NYSE, Qualcomm, J.C.Penney


Analyst opinions on stocks making headlines Thursday

S&P MAINTAINS STRONG BUY RECOMMENDATION ON SHARES OF ORACLE CORP.

From Standard & Poor's Equity Research

ORCL; $19.97

At an analyst meeting, management expressed confidence that Oracle will meet or exceed its goal of 20% earnings growth. While acknowledging that a global slowdown would have an impact, CFO Catz stated that the current environment was factored into November-quarter guidance. We think Oracle's highly profitable maintenance revenue stream should also afford it some cushion. In view of the diversity of Oracle's customer base, its broad product set and geographic exposure, we are maintaining our estimates for non-GAAP EPS of $1.21 for fiscal 2008 (May) and $1.43 for fiscal 2009. /Z. Bokhari

S&P MAINTAINS BUY RECOMMENDATION ON SHARES OF NYSE EURONEXT

NYX; $86.22

The company announces the appointment of Duncan Niederauer as its new CEO, effective December 1. Niederauer will replace John Thain who is stepping down to become chairman and CEO of Merrill Lynch (MER). Niederauer joined NYX as president and co-chief operating officer on April 2007. We are encouraged by the speed at which a successor was named, and we do not expect any material change in NYX's strategy or its Euronext integration. With its wide geographic and product footprint, we view NYX as well positioned to benefit from increased volatility across the financial markets. /J. Willey

S&P MAINTAINS HOLD OPINION ON QUALCOMM SHARES

QCOM; $40.04

Following Qualcomm's analyst day in New York City, we are keeping our hold recommendation on the shares. We believe Qualcomm is well-positioned to benefit from growing global demand for data-centric wireless phones that contain its chipsets. However, we believe litigation risks to Qualcomm's license business, increased R&D costs to develop new chips for wireless and non-wireless products, and lower selling prices for handsets will limit EPS growth. We think Qualcomm's planned acquisition of mobile banking partner will open modest revenue streams over the longer term. We are keeping our $40 target price. /T. Rosenbluth

S&P MAINTAINS BUY RECOMMENDATION ON SHARES OF J.C. PENNEY, ON VALUATION

JCP; $44.37

October-quarter operating EPS of $1.03 vs. $1.26 misses our $1.04 estimate. Despite markdowns and 3.5% same-store sales decline, operating margin rose slightly on tight cost controls. We think the JCPenney brand remains a leading shopping choice for middle-income families. We also see the company quickly adjusting merchandising strategies and spending to react to sales trends. But with consumer spending slowing, we are lowering our fiscal 2008 (Jan.) and fiscal 2009 operating EPS estimates to $4.55 and $5.20, from $5.28 and $6.30, and our 12-month target price to $55 from $80 solely on peer-P/E valuation. /J. Asaeda

S&P MAINTAINS HOLD RECOMMENDATION ON SHARES OF UNITED RENTALS

URI; $23.88

The shares are up a bit today after news that private equity firm Cerberus Capital will not proceed with its $4 billion leveraged buyout of URI. Cerberus did not cite a material adverse change that would allow it to end the deal without paying URI a $100 million breakup fee. However, an unconfirmed Reuters report says Cerberus is trying to renegotiate the terms. We believe URI will continue to seek an acquirer if they cannot renegotiate the deal with Cerberus. We maintain our target price of $30, which is 11X our 2007 EPS estimate, and a small discount to historical P/E range. /P. Wang

S&P MAINTAINS BUY RECOMMENDATION ON SHARES OF TRUMP ENTERTAINMENT

TRMP; $6.03

After further review, we are revising our 2007 and 2008 estimates to losses of 93 cents and 36 cents, respectively, from EPS of 5 cents and 40 cents, on lower revenue and margin assumptions. For 2008, we look for gradual improvement in revenue and operating performance on easier comparisons as the Atlantic City market anniversaries nearby slot competition, and on possible ancillary benefits from the start of express train service from New York City to Atlantic City in second quarter 2008. We are keeping our 12-month target price of $12 based on our sum-of-the-parts and peer multiple analyses. /E. Kwon, CFA


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