From Standard & Poor's Equity ResearchCREDIT SUISSE CUTS TARGET, MAINTAINS NEUTRAL ON HEWLETT-PACKARD
Credit Suisse analyst Bill Shope says while Hewlett-Packard's (HPQ) $0.93 EPS is in line with consensus expectations, $28.8 billion revenue missed his $32.08 billion estimate by a surprisingly wide margin.
Shope says printer consumables sales fell sharply, but a steep deterioration in hardware sales countered profit impact. He notes the consumables collapse is likely to trigger margin pressure unless HP lets its installed base deteriorate. He says a server pricing war is also taking a toll on margins.
He sees $3.36 fiscal year 2009 (October) EPS versus guidance of $3.76-$3.88. He cuts $35 12-month target to $30.
WHOLE FOODS MARKET, INC. (WFMI 12.5) UP 3.21, WHOLE FOODS (WFMI) POSTS Q1. JEFFERIES UPGRADES TO BUY FROM HOLD
Jefferies analyst Scott Mushkin says even with the considerable economic headwind, he believes Whole Foods Market (WFMI) is beginning to take steps to reverse the decline in operating performance and stock price.
Mushkin notes that for the first time since the second quarter of fiscal year 2006, WFMI produced positive cash flow and management is committed to free cash flow growth throughout the balance of the year. He says management appeared to be more open to the idea of store closures than in the past. He notes the company appears to be getting more serious about addressing its issues in the United Kingdom.
He raises $0.63 fiscal year 2009 (September) EPS estimate to $0.82 and $0.87 fiscal year 2010 to $1.22, and $11 target to $13.
RAYMOND JAMES UPGRADES ADVANCE AUTO PARTS TO STRONG BUY FROM MARKET PERFORM
Raymond James analyst Dan Wewer says Advance Auto Parts' (AAP) fourth quarter operating EPS improved to $0.51, vs. $0.35, beating his above-consensus estimate of $0.39.
Wewer says the extra week during the fourth quarter 2008 added to EPS, with the balance driven by a 3% comp sales gain (his estimate was 0%) and 140 basis-points increase in gross margin (his estimate was +30 bp).
He says a combination of favorable industry dynamics and improved company fundamentals leads him to believe AAP is finally in a position to improve its prospects for comp sales, gross margin, and ROIC. He has a $39 price target, which is 14.2 times his $2.75 2009 EPS estimate.