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): Cuts to 4 STARS (buy) from 5 STARS (strong buy)
Analyst: Zaineb Bokhari
Preliminary November quarter revenues of $209 million to $212 million are below our $234 million forecast; operating earnings per share of 28 cents to 31 cents before options is below our 38 cents estimate, hurt by poor sales execution. We are lowering our full fiscal year 2006 (ending February) earnings per share estimate to $1.26 from $1.58, and our fiscal year 2007 estimate to $1.53 from $1.80 to reflect November quarter miss and projected option expense of about 15 cents in each year. While we continue to believe Cognos will benefit from its new product cycle, we believe sales execution issues will persist longer than we had previously expected. Our 12-month target price falls by $9 to $38.Computer Storage & Peripherals Sub-Industry (EMC
): Reiterates Positive Outlook
Analyst: Richard Stice, CFA
Research firm IDC reports that the external disk storage systems market grew 12.5% in the third quarter, the highest rate since the inception of its tracking system in 2001. EMC (EMC
) once again maintained its leading market share position. In our view, this rate of growth will be difficult to maintain in 2006. However, we continue to believe that industry dynamics are favorable, given the amount of newly created content and a focus on data protection. Our top picks include EMC, Seagate Technology (STX
), Emulex (ELX
), Qlogic (QLGC
) and Western Digital (WDC
).Toyota Motors (TM
) : Raises target price
Analyst: Efraim Levy
We are raising our 12-month target price by $8 to $99. Toyota's U.S. vehicle sales in November rose 6% from a year ago, and we see the company continuing to gain market share in the U.S. and globally. But near-term margins are likely to be penalized by higher raw material costs, increased investment for future vehicles and the negative translation impact of a rising dollar against the yen. Our new target price is based on a multiple of nearly 15 times our fiscal year 2007 (ending March) earnings per share estimate of $6.76. Nova Chemicals (NCX
) : Maintains 3 STARS (hold) Opinion
Analyst: Andrew West, CFA
Nova Chemicals announced an extension of its force majeure on major products from its Corunna, and Sarnia, Ontario manufacturing facilities, due to problems with newly installed equipment that have delayed the restart of its Corunna flexi-cracker. Nova Chemicals expects full operations to resume by mid- to late December 2005. We estimate the delay will result in a $65 million total negative impact to fourth quarter net income. We now see 2005 revenue of $5.7 billion and are reducing our 2005 operating earnings per share estimate to 18 cents from 54 cents. But our 2006 forecast remains $5.04, and our 12-month target price stays $38.