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From Standard & Poor's Equity ResearchGOLDMAN CUTS ESTIMATES, TARGET FOR WHOLE FOODS MARKET
Goldman Sachs analyst Simeon Gutman says Whole Foods Market's (WFMI) results indicate its business is in transition as Oats integration costs fully ramp up. He says second quarter EPS $0.01 below his and consensus estimates and the shortfall occurred despite pre-opening expenses being $9 million lower than expected due to fewer new store openings-- Oats spending simply that much higher.
Gutman notes identical store sales (ID) slid to +5.1% vs. initial second quarter run rate of +6.9%; takes 2-year average ID to approximately 9.5%, nearly 400 basis points of sequential deceleration from the first quarter. He says it appears that the macro-environment is, for first time in recent memory, adversely impacting sales.
He cuts $1.24 fiscal year 2008 (September) EPS estimate to $1.20, $1.67 for fiscal year 2009 to $1.65. He cuts his 12-month target price of 45 to 39. He keeps a neutral opinion on the stock.
JEFFERIES UPGRADES STAPLES TO BUY FROM HOLD
On May 13, Corporate Express (CXP) reportedly rejected Staples' (SPLS) raised bid of €8 per CXP Ordinary share, but agreed to talk. Jefferies analyst Daniel Binder says the odds of getting the deal done rose dramatically yesterday, but he thinks SPLS may have to offer €8.50 a share to get it done.
Binder says benefits of the acquision include domestic market share in delivery, possible dramatic margin improvement, elimination of a big aggressive competitor, expanded footprint in Europe, and a presence in Australia. He says he's still cautious on core SPLS business, but thinks a combination would provide significant EPS upside over the next two years; worst case, strong downside protection from current levels.
He raises 20-22 price target for Staples to 28.
JEFFERIES UPGRADES EVERGREEN SOLAR TO BUY FROM HOLD
Jefferies analyst Paul Clegg says Evergreen Solar (ESLR) continues to take risk out of its story through strong execution. He notes the company's U.S.-based Devens facility construction and development appears to be on track. He says ESLR already has 100% of silicon needs for its full expansion through 2012 locked in. He believes the company's efforts to perfect the next generation of quad ribbon technology have been fruitful.
Clegg notes recent consolidation of ESLR shares. He believes concerns regarding the company's capital needs and related potential revisions to estimates are reflected in the stock price.
He still sees $0.34 2008 loss per share and $0.31 2009 EPS. He keeps 10 price target on the stock.