Google (GOOG): Reiterates 3 STARS (hold)
Analyst: Scott Kessler
Google priced a public offering of 14.2 million shares at $295 apiece, raising $4.2 billion. The underwriters have an option to purchase up to 600,000 more shares for over-allotments, potentially increasing the offering's proceeds to $4.3 billion. We expect these funds to be used for capital expenditures and acquisitions. Google projects it will spend $700 million on capex in 2005, up from $319 million in 2004. We believe some of this capital could be used to ready new offerings in the payments and classifieds areas, and to make acquisitions to introduce new services and expand internationally.
Walt Disney (DIS): Reiterates 4 STARS (buy)
Analyst: Tuna Amobi, CPA and CFA
CFO Staggs said at an investor conference that a possible $100 million write-off of aircraft leases to Delta Airlines, which filed for bankruptcy, would have a "meaningful" impact on fourth quarter and fiscal year 2005 (ending September) numbers. We see 3 cents to 4 cents of potential downside on one-time items (some may be recouped) compared with our operating earnings per share estimates of 25 cents and $1.34 for these periods. Shares may see mild pressure on the one-time event, but the CFO affirms his view of double-digit earnings per share growth through at least fiscal year 2007. Among positive news items are the successful 9/12 Hong Kong park opening and new ESPN 8-year deal with Major League Baseball.
Amdocs (DOX): Ups to 5 STARS (strong buy) from 4 STARS (buy)
Analyst: Todd Rosenbluth
We believe that the customer care and billing provider Amdocs will continue to benefit from trends in the communications industry, including increasing competition between telecom and cable providers, as well as recent and pending acquisitions. In addition to Amdoc's growing revenues and backlog from Cingular's migration of customers onto its systems to improve churn, we see additional catalysts from potential new business from Sprint Nextel (S) and SBC Communications (SBC). Our 12-month target price remains $34, derived from our relative valuation analysis.