Merrill Lynch raised its estimates on CheckFree (CKFR).
Analyst Gregory Smith says the electronic bill payment company's second-quarter results were a bit better than his forecast. He says the quarter was driven by better-than-expected transactions as the company brought on a large client and benefited from the last quarter of an old Bank of America contract.
He raised the 98 cents fiscal 2004 (Jun.) earnings per share estimate to $1.10, and upped the $1.12 fiscal 2005 estimate to $1.15. (These estimates will change once CheckFree closes its acquisition of American Payment Systems, a provider of walk-in bill payment services. APS is a unit of UIL Holdings.)
Smith is keeping his neutral rating on the shares. While he thinks key overhangs on CheckFree are fading, he sees the stock as fully valued at current levels. Smith says he would need to see either expectations for greater growth potential in fiscal 2005, or more atractive valuation, before getting more aggressive on shares.