Markets & Finance

S&P Picks and Pans: RIM, Micron, Southwest Airlines, Amgen


Analysts' opinions on stocks in the news Thursday

From Standard & Poor's Equity ResearchS&P MAINTAINS HOLD OPINION ON RESEARCH IN MOTION SHARES (RIMM; 115.79):

RIMM posts fourth quarter (February) EPS of $0.72, vs. $0.33, above our $0.69 estimate. Revenues more than doubled and exceeded our forecast due to growth in handset shipments and account activations. Operating margins expanded more than expected. We contend RIMM's results and strong guidance show limited impact from a challenging economy that we had been concerned about. We are raising our fiscal year 2009 (February) EPS estimate by $0.63 to $3.78, aided by added handset replacement by customers and product launches. We are lifting our 12-month target price by $13 to $128 based on revised p-e-to-growth analysis. -T.Rosenbluth

S&P REITERATES HOLD RECOMMENDATION ON SHARES OF MICRON TECHNOLOGY (MU; 6.39):

February-quarter operating loss per share of $0.45, vs. $0.07 loss, is wider than our $0.29 loss estimate. Gross margin was narrower than we projected, reflecting a significant decline in prices for memory products, especially for NAND flash memory. While we remain cautious on near-term deteriorating memory prices, we think MU is executing on plans for reducing per-unit costs, and we project favorable pricing longer-term will aid future results. We are widening our fiscal year 2008 (August) operating loss forecast by $0.29 to a loss of $1.06 but keeping our 12-month target price of $9. -A. Zino, CFA

S&P REITERATES BUY OPINION ON SHARES OF SOUTHWEST AIRLINES (LUV; 12.78):

LUV codeshare partner ATA Airlines is to cease all scheduled passenger service. We think that LUV could eventually expand operations in Chicago to fill this capacity void, and believe the impact on LUV's revenue stream is not likely to be material. Since first signing a codeshare agreement with ATA, LUV has bought a total of ten airport gates at Chicago Midway from ATA. We think that this gives LUV the flexibility it needs to take over any attractive ATA routes. We are keeping our 2008 EPS estimate at $0.70 and our 12-month target price at $18, 26 times that estimate, above peers. -J. Corridore

S&P REITERATES HOLD OPINION ON SHARES OF AMGEN (AMGN; 41.74):

AMGN reports Phase III denosumab data confirming bone mineral density improvement in post-menopausal women, with a trend towards reducing fractures in these patients but also a higher incidence of serious infections as compared with a placebo. We expect further denosumab data across 2008 and 2009, and despite strong efficacy data to date, we see safety emerging as potential hurdle to approval, given our view of alternative osteoporosis treatments. As a result, and on recent regulatory and competitive overhangs, we cut our 12-month target price by $6 to $49 on revised p-e analysis. -S. Silver


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