Markets & Finance

S&P Picks and Pans: Oracle, Mattel, TI, Nike, Noble


Analyst opinions on stocks making headlines Friday

S&P MAINTAINS STRONG BUY RECOMMENDATION ON SHARES OF ORACLE CORP.

From Standard & Poor's Equity Research

ORCL; $21.04

August-quarter operating EPS of 21 cents vs. 17 cents, is one cent above our view. Non-GAAP revenues rose 25% to $4.6 billion, $180 million above our forecast, aided by acquisitions. Solid 22% database and middleware growth supports our view that Oracle's core franchise remains strong. We expect wider non-GAAP operating margins in fiscal 2008 (ending May) and fiscal 2009 as Oracle derives additional cost efficiencies from acquisitions. We raise our fiscal 2008 EPS estimate 4 cents to $1.21 and fiscal 2009's 3 cents to $1.43. We lift our discounted cash-flow-based 12-month target price by $2 to $26, assuming 10.5% cost of capital and 4% terminal growth. /Z. Bokhari

S&P MAINTAINS STRONG BUY OPINION ON SHARES OF MATTEL

MAT; $24.20

In a meeting with the Chinese chief of product safety, Mattel took the blame for design flaws in its toys and said it recalled more lead-tainted toys than justified. This statement does not affect our fundamental analysis of the company and we maintain our view that while the recent toy recalls have hurt the company's image, we see only a minimal impact on upcoming holiday sales. Furthermore, we think Mattel will be able to restore consumer confidence in the safety of its products. We maintain our 12-month target price at $29 based on our historical p-e analysis. /E. Kolb

S&P REITERATES STRONG BUY OPINION ON SHARES OF TEXAS INSTRUMENTS

TXN; $36.70

The shares are higher this morning after the company sets an additional $5 billion stock buyback program. TI has repurchased about $20B of stock over the last few years. Also, it raises its quarterly dividend 25% to 10 cents, providing a dividend yield of about 1.1% at current share price levels. We view this as favorable news, a testament to what we see as TI's solid business model, leading market positions, and strong cash-generation abilities. /C. Montevirgen

S&P REITERATES BUY RECOMMENDATION ON SHARES OF NIKE INC.

NKE; $58.32

Before 20 cents one-time tax benefit, August-quarter EPS of 92 cents vs. 74 cents beats our 87 cents estimate on international strength, which rose at a solid double-digit rate, offsetting U.S. sales that were short of our forecast. Total future orders rose 11.5%, led by 17% growth in Europe and Asia. We think results further validate our view that Nike's strong global brands and broad reach position it well to grow income at a mid-teen rate, and to weather weakness in individual markets or segments. We are raising our fiscal 2008 (May) EPS estimate by 20 cents to $3.55, and our target price by $3 to $67. /E. Kwon, CFA

S&P REITERATES STRONG BUY OPINION ON SHARES OF NOBLE CORP.

NE; $50.99

Noble said late yesterday that Mark Jackson, the company's chairman, president and CEO, has resigned, effective immediately. We are surprised by the news, given that Jackson, who has been with Noble since 2000, had attained the posts of chairman and CEO less than one year ago. The company says a search committee had been formed to review candidates for the president and CEO positions. In the interim, board member William Sears, who has over 40 years of experience in the petroleum industry, will serve as chairman, managing Jackson's former responsibilities. /S. Glickman


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