From Standard & Poor's Equity ResearchGOLDMAN KEEPS BUY ON IBM
Goldman Sachs analyst David Bailey says IBM's (IBM) third quarter revenue was short of forecasts, but EPS was in line.
Bailey sees a downward bias for all hardware companies and doesn't believe any of his companies will make it through next 12-18 months unscathed. However, he thinks those with the most EPS resiliency and diversity will outperform; he recommends owning IBM and Hewlett-Packard (HPQ) because he expects them to see the least amount of EPS leakage, due to cost cutting, buybacks and other non-operational items.
For IBM, he sees $8.79 2008 EPS, but cuts $9.80 2009 estimate to $9.35. He cuts $140 price target to $110 on historical trough multiple of 12.5 times 2009 EPS. estimate.
STIFEL KEEPS BUY ON QUEST SOFTWARE
Stifel analyst Todd Weller says he views Quest Software's (QSFT) news that it plans a meaningful share buyback program and named a new CEO with the current CEO becoming chairman as positive.
With respect to the share buyback, Weller notes this issue became a bit contentious after last quarter's conference call, where QSFT said it was weighing acquisitions vs. a share buyback. He thinks management indicating a potential tender of $13.25-$15.50 validates his view that QSFT shares below $15 are extremely cheap.
Regarding the CEO change, he believes it could improve QSFT's visibility on the Street. He has a $20 price target on the stock.
WEDBUSH LOWERS TARGET PRICE ON MEN'S WEARHOUSE
Wedbush analyst Betty Chen says softness in the tailored clothing business led Men's Wearhouse (MW) to cut its third quarter adjusted EPS guidance to $0.24-$0.28.
In turn, Chen cuts her below-consensus third quarter EPS estimate to $0.25 from $0.36 and fourth quarter's to $0.22 from $0.23, leading to a new fiscal year 2009 (January) estimate of $1.40, vs. $1.51 previously.
She says, with the cyclicality in the MW business and her belief for a prolonged macro-economic downturn that could continue to pressure near-term earnings, she's maintaining a hold rating on MW. To reflect lower EPS estimates, she cuts her $19 price target to $17.