) to sector outperform from sector perform.
Analyst Ali Irani says concerns about margin and growth outlook should dissipate within tailwind of declining component pricing, improving mix, and bullish guidance, which sees a $60 billion sales target pulled in by a full year to fiscal 2006 (ending January).
He notes third-quarter results and fourth-quarter guidance, while in-line, carry underlying strength. Expected savings from component buying drove upside in gross margins.
Irani raises his $1.50 fiscal 2006 earnings-per-share estimate to $1.60 on a third straight year of 19% top-line growth. He sets $1.85 fiscal 2007 earnings-per-share estimate, which generates a $48 target. He sees $1 downside for almost $10 upside potential.