Markets & Finance

S&P Picks and Pans: Big Lots, Brown-Forman, GM, Novell, National Instruments


Analysts' opinions on stocks in the news Friday

From Standard & Poor's Equity ResearchS&P MAINTAINS HOLD OPINION ON SHARES OF BIG LOTS ( BIG; 14.79):

October-quarter EPS of $0.15, vs. $0.14, beats our estimate by a penny on lower taxes. With negative macro drivers taking a toll on consumer spending, BIG sees same-store sales down 2%-4% in the January-quarter. Given weaker sales outlook and our expectations of deleveraging of expenses through the first half of fiscal year 2010 (January), but gross margin improvement on benefits of global sourcing and a favorable closeout deal environment, we trim our fiscal year 2009 EPS estimate by $0.06 to $1.82, and fiscal year 2010's by $0.05 to $1.90. On a historical-p-e valuation, we keep our 12-month target price at $18. -J. Asaeda

S&P REITERATES HOLD RECOMMENDATION ON SHARES OF BROWN-FORMAN (BF.B; 46.97):

October-quarter EPS of $0.94, vs. $0.83, exceeds our estimate by $0.02. Sales were in line with our view while advertising and SG&A expenses were below. We think BF.B is successfully focusing more marketing effort on the off-premise channel during the industry's critical selling season. We are encouraged by Southern Comfort's return to U.S. wholesale depletions growth. However, we remain cautious, based on BF.B's guidance that assumes current trends continue. On lower anticipated expenses, we raise our fiscal year 2009 (April) EPS forecast by $0.04 to $3.17 and our target price by $1 to $51. -E. Kwon-CFA

S&P REITERATES SELL OPINION ON SHARES OF GENERAL MOTORS (GM; 4.13):

As automakers testifiscal year in Congress, we believe the case is being made that risking the failure of automakers in the very short term would be more costly than the price of initial support. Still, we think Congress will want its pound of flesh in the form of concessions from UAW and other stakeholders. Ultimately, we expect initial funding to be approved, with further funding conditioned on achieving clear financial metrics. One thing we think is clear is that equity holders will see dilution under any plan, but we see that as better than the alternatives. -E. Levy-CFA

S&P MAINTAINS HOLD RECOMMENDATION ON SHARES OF NOVELL INC. (NOVL; 4.09):

NOVL posts October-quarter loss per share of $0.05, vs. $0.05 loss, missing our estimate of $0.03 EPS. Results were hurt by restructuring and other one-time charges, and revenue was flat at $245 million, $2 million below our projection. NOVL sees slower growth in IT spending and longer sales cycles, but should be buffered somewhat by its relationship with Microsoft. Open platform solutions revenue grew 33% year-over-year. We trim our fiscal year 2009 (October) revenue forecast by $11 million to $935 million, but increase our EPS estimate by $0.01 to $0.17 to reflect effective cost controls. We keep our 12-month target price of $5. -J. Yin

S&P MAINTAINS HOLD RECOMMENDATION ON SHARES OF NATIONAL INSTRUMENTS (NATI; 20.46):

NATI reduces fourth quarter guidance to reflect lower worldwide demand. It now expects revenue of $204-$218 million, down from $208-$22 million, and EPS of $0.29-$0.37, down from $0.33-$0.41. The lowered guidance reflects recent purchase manufacturing data and announcements by many customers that they will extend their holiday shutdowns through the end of the year. We believe the economic recession will worsen for the next several quarters, and we are cutting our EPS estimate for 2008 by $0.05 to $1.16 and 2009's by $0.23 to $1.14. In addition, we reduce our 12-month target price by $6 to $22. -J. Yin


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