) reported 27 cents second-quarter earnings per share (pro forma). Citigroup cut its rating to hold from buy on valuation.
Analyst Glen Yeung says PortalPlayer beat his pro forma second-quarter EPS estimate of 25 cents by 2 cents. He raised third-quarter EPS (pro forma) forecast to 32 cents from 30 cents, $1.23 for 2005 to $1.30, and $1.15 for 2006 to $1.19.
Based on his higher EPS estimates, Yeung raised his target price to $32 from $25, but downgraded the shares to hold given PortalPlayer's recent stock appreciation (up 48% since April). He will be looking for traction in future Apple flash products, diversification on non-Apple revenue sources, and any meaningful share pullback as opportunities to possibly become more positive on the shares.