Markets & Finance

Analyst Picks and Pans: Intel, Yum Brands, 3PAR


What Wall Street analysts are saying about selected stocks in the news Wednesday

Intel Corp. (INTC)

Barclays raises estimates, price target

After the close of trading July 14, Intel posted better-than-expected second-quarter earnings of $0.18 per share (non-GAAP). Barclays analyst Tim Luke said on July 15 that Intel delivered strong second-quarter results ahead of already elevated investor expectations for sales and margins. He said the $8 billion in reported revenue was up 2% quarter-over-quarter, well above Wall Street's $7.3 billion forecast and high-end expectations at $7.5 billion-$7.6 billion. Luke also noted Intel's 51% gross margins, vs. the 46% Street consensus, and its $0.18 EPS (excluding the fine it paid to the European Commission) vs. the $0.08 consensus.

Luke raised his $0.54 2009 EPS estimate to $0.81, and his $0.90 2010 estimate to $1.15. He also hiked his $18 price target to $19, and maintains an equal-weight rating on the shares.

Yum Brands (YUM)

UBS maintains buy

UBS analyst David Palmer said on July 15 that Yum's $0.50 second-quarter EPS came in $0.07 above the Wall Street consensus on a favorable tax rate. But despite the upside, Yum kept its 2009 view at $2.10 EPS. Palmer said this is a mild disappointment, and believes it reflects a sobering top-line in the U.S., and, to a lesser degree China. Palmer thinks China same-store sales are gradually improving due to easing comparisons rather than a rebound in consumer demand. The analyst notes input cost relief has been supporting earnings, but not enough for an upward revision to guidance.

Palmer maintains a $38 price target, 16 times his $2.39 2010 EPS estimate.

3PAR Inc. (PAR)

Merriman Curhan downgrades to neutral from buy

Merriman Curhan analyst Alex Kurtz said on July 15 that after a disappointing first-quarter preannouncement, "flattish" guidance for September, and what looks like increasing competitive pressures from EMC (EMC), he expects 3PAR's stock price to be range-bound near-term in the $7.75-$8.25 range. He still believes 3PAR's platform provides a key alternative high-end platform to larger incumbents. Yet the company's lack of profitability and limited growth prospects in fiscal 2010 (ending March) argue for a more in-line enterprise value-to-sales multiple with the company's peer group.

Kurtz cuts his $0.15 fiscal 2010 EPS estimate to $0.02.


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