From Standard & Poor's Equity ResearchMORGAN KEEGAN UPGRADES SEALY TO OUTPERFORM FROM MARKET PERFORM
Morgan Keegan analyst Laura Champine says Sealy's (ZZ) first quarter EPS was well ahead of her $0.12 estimate and $0.10 consensus on improved expense control and better-than-expected sales. She notes that the shares down 37% since the start of year despite industry leading position, substantial new product offering, and reasonable valuation.
While ZZ faces higher product launch costs and further margin compression in the second quarter, she believes investors should look to the second half of the year as margins stabilize and EPS improve. She suspects "shorts" could begin to throw in the towel given upside surprise and the realization that there is inherent value to long time market share leader.
Champine cuts $0.62 fiscal year 2008 (November) EPS estimate to $0.55, $0.78 fiscal year 2009 to $0.70. Her DCF model indicates fair value of 12 a share.
CREDIT SUISSE RAISES ESTIMATES, TARGET FOR WEBSENSE
Credit Suisse analyst Philip Winslow says Websense's (WBSN) pre-announced first quarter revenue of $87 million beat his $84.3 million estimate. He says while net billings came in below his estimate for the first quarter, annualized billings actually exceeded his estimate by about $3.8 million.
He raises $335.7 million 2008 revenue forecast to $343.1 million, and $1.24 2008 EPS estimate to $1.32. He also raises his 20 target price to 20.50.
Winslow keeps neutral opinion, saying despite a decent first quarter, he awaits further evidence of consistent execution before turning positive on the stock
PACIFIC GROWTH DOWNGRADES NEKTAR THERAPEUTICS TO NEUTRAL FROM BUY
Pacific Growth analyst Jay Sarwar says Nektar Therapeutics (NKTR) ceases talks with potential partners for its inhaled insulin programs as data show new cases of lung cancer in patients using inhaled insulin. He says a renewed partner was the primary near-term driver for the stock.
Sarwar says this news is disappointing given that at yearend conference call, management reiterated a high-level of interest from potential partners. He thinks near-term stock performance was being driven by expected partnership for inhaled insulin.
Absent this, he thinks investors will view the company's product portfolio as still on the come, but until he sees further data on pipeline candidates, he believes the stock will stay in the mid-single digit range.