Tag Archive | "estimates"

CRM: Morgan Stanley Says Buy, $200 Target

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Shares of software vendor Salesforce.com (CRM) are up $3.45, or 2.4%, at $148.75 after Morgan Stanley’s Adam Holt this morning raised his rating on the stock to Overweight from Equal Weight, with a $200 price target, writing that workloads on “cloud” computing facilities, such as the company’s “Force.com” online platform, is going to rise 50% per annum, compounded, through the next three years, based on Morgan Stanley’s survey of 300 IT executives.

Usage of cloud-based applications will increase from 51% of companies today to 80%, Holt says the data show.

Salesforce should be the biggest beneficiary, Holt thinks, and he believes consensus estimates for the company don’t reflect the rate of growth, instead modeling something like 20% cloud industry growth.

Based on an expectation Salesforce will garner an increasing share of the “software-as-a-service” pie, not to mention “platform-as-a-service” business, Holt raised his estimates for the company for fiscal 2013 and 2014. He sees $2.17 billion in revenue for this year, the same as his prior estimate, but for 2013 he sees revenue of $2.57 billion, from a prior estimate of $2.53 billion, and for 2014, he sees revenue of $3.23 billion, up from $3.082 billion previously.

That should produce non-GAAP EPS next year of $1.90, rather than the $1.80 he’d previously expected, and EPS of $2.43 in 2014, rather than the $2.31 he’d previously modeled. Holt models Salesforce earning $1.32 this year.

Holt’s $200 target is based on a 47 multiple of his projected free cash flow per share of $4.11 next year, which he suggests is a 1.3 times growth multiple.

Article courtesy of Tech Trader Daily

CRM: Morgan Stanley Says Buy, $200 Target

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Shares of software vendor Salesforce.com (CRM) are up $3.45, or 2.4%, at $148.75 after Morgan Stanley’s Adam Holt this morning raised his rating on the stock to Overweight from Equal Weight, with a $200 price target, writing that workloads on “cloud” computing facilities, such as the company’s “Force.com” online platform, is going to rise 50% per annum, compounded, through the next three years, based on Morgan Stanley’s survey of 300 IT executives.

Usage of cloud-based applications will increase from 51% of companies today to 80%, Holt says the data show.

Salesforce should be the biggest beneficiary, Holt thinks, and he believes consensus estimates for the company don’t reflect the rate of growth, instead modeling something like 20% cloud industry growth.

Based on an expectation Salesforce will garner an increasing share of the “software-as-a-service” pie, not to mention “platform-as-a-service” business, Holt raised his estimates for the company for fiscal 2013 and 2014. He sees $2.17 billion in revenue for this year, the same as his prior estimate, but for 2013 he sees revenue of $2.57 billion, from a prior estimate of $2.53 billion, and for 2014, he sees revenue of $3.23 billion, up from $3.082 billion previously.

That should produce non-GAAP EPS next year of $1.90, rather than the $1.80 he’d previously expected, and EPS of $2.43 in 2014, rather than the $2.31 he’d previously modeled. Holt models Salesforce earning $1.32 this year.

Holt’s $200 target is based on a 47 multiple of his projected free cash flow per share of $4.11 next year, which he suggests is a 1.3 times growth multiple.

Article courtesy of Tech Trader Daily

HP: Morgan Stanley Says Hold, ‘Clouds’ Gathering In Server Land

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Morgan Stanley’s Katy Huberty today cut her rating on shares of Hewlett-Packard (HPQ) to Equal Weight from a prior Overweight, writing that the shift to “cloudcomputing, where more units of servers are sold into hosted data centers, rather than enterprise offices, means a 1% decline in server units sold over the next three years.

That’s bad for both HP, and Dell (DELL), because the trend in hosted data centers is to buy from “lower cost Asian vendors,” a trend she expects to continue.

Huberty cut her estimates: she was previously modeling 3.2% revenue growth for HP in the fiscal year ending October of 2012, but now that’s looking like just 2.9%. Similarly, she cut her 2013 estimate to $133.1 billion, down from $135.6 billion previously, for growth of just 1.6%, versus a prior 1.9% estimate.

HP will now have higher levels of operating expense “distributed across a slow growth revenue base,” writes Huberty. In addition to the server shift, HP has to contend with challenges to PCs from tablets, less IT services business as companies simply move everything to the cloud, and a general decline in pages printed by enterprise customers.

Huberty suggests the company would, “offer investors a better revenue growth and margin story without PCs,” with perhaps $44 per share in value for the enterprise business on a standalone basis. And she thinks the stock won’t work until HP outlines how it will “limit downside risk in PCs and printers.”

Huberty’s “base case” on the stock is a $42 share price, for an 8 times forward P/E on her fiscal 2012 estimate of $5.30.

HP shares today are up 11 cents at $35.92.

Previously: HP: Debt’s Cheap, Do A $10B Buyback Now, Says Bernstein, May 24th, 2011.

Article courtesy of Tech Trader Daily

RIM: Markets Day, Buyback Could Catalyze, Says Citi

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Citigroup’s Jim Suva this afternoon updated his estimates for Research in Motion (RIMM) after perusing the company’s annual report, which came out last week.

Mainly these are small tweaks resulting in slight changes to estimates — Suva takes his fiscal 2013 EPS estimate down by a penny, for example, to $8.87 per share. The important thing is that, on the whole, “there are no changes to the key model drivers (units, ASPs, subs, gross margins, etc.).

Suva retains a Buy recommendation on the stock and an $80 price target.

He sees RIM’s May 2nd capital markets day as the next available “catalyst,” followed by the BlackBerry World conference that same week. Capital markets day may offer some clarity on how RIM gets to a target of $7.50 per share in 2012. Around June, he expects there might be some announcement of a share buyback initiative.

“RIMM shares were trading at 10.5x next twelve months consensus EPS at the time of the June 2010 [buyback] announcement,” writes Suva, “so we would not be surprised to see another large buyback given current valuation of 7.9x consensus next twelve months EPS.”

RIM shares today fell 39 cents, or 0.7%, to $54.40.

Previously:

RIM: Morgan Keegan Encouraged By Annual Report, April 1st, 2011;
RIM: Losing Subscribers In North America? Asks UBS, March 31st, 2011.

Article courtesy of Tech Trader Daily

Dell: Between Tablets And A Hard Place, Says Cowen

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Cowen & Co. analyst Matthew Hoffman today initiates coverage of Dell (DELL) with a Neutral rating, writing that the stock, at 9 times forward earnings estimates, and 5.7 projected free cash flow, is about fairly valued, given the likelihood that the company’s revenue will and operating cash flow will struggle under the weight of increasing tablet computer competition.

Hoffman raised his estimates for tablet computer sales, seeing greater cannibalization of PCs than he had previously projected.

We are  increasing calendar ’11 tablet revenue to $32B (from $31B); cutting calendar ’11 PC units to 356MM (just +1% y/y) from 399MM (+11% y/y); cutting calendar ’11 PC revenue to $237B (+0% y/y) from $255B (+6% y/y); increasing calendar ’12 tablet units to 91MM (+77% y/y) from 82MM (+59% y/y) units; and increasing calendar ’12 tablet revenue to $58B (+81% y/y) from $44B (+42%) previously.

Ans so tablets will make up 20% of 2012′s computing market, up from a prior 15% estimate.

Dell is likely to basically sit out much of the action, he thinks, until late next year when Microsoft’s (MSFT) Windows 8 arrives. What that means is that Dell will maintain 14% of the global PC market, but of a market that’s shrinking, meaning Dell’s PC revenue, which is 50% of sales, will decline 1% per year, compounded, in 2012 and 2013.

That leads Hoffman to estimates for Dell dramatically below consensus, at $62.6 billion in revenue for the year ending next January, and $1.68 in EPS, versus consensus of $64.76 billion and $1.70. While Dell should still experience decent growth in its IT services and enterprise products lines of business (servers, etc.), it won’t be enough to offset the tablet erosion of the PC market, he thinks.

Dell may still generate healthy cash flow of $2.5 billion per year, he notes.

But the question is whether Dell, in order to become more aggressive in tablets, will spend more heavily to develop technology it needs. That would threaten earnings, he notes.

Meantime, Dell today said it would open a new facility in Santa Clara, in California’s Silicon Valley, where the company plans to employ up to 1,500 staff within the course of the next five years. The facility will help Dell consolidate several teams that have come to the company from its acquisitions of startups in the Valley, it said. They include Everdream, Ocarina, Zing, and Scalent.

Dell shares today are up 29 cents, or 2%, at $14.54.

Article courtesy of Tech Trader Daily

Apple: Deutsche Lifts Target, Cuts HPQ, DELL On Tablet Growth

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Deutsche Bank hardware analyst Christ Whitmore this morning cut Hewlett-Packard’s (HPQ) price target to $40 from $42, and cut Dell’s (DELL) to $18 from $20, to reflect weakening of the PC market and an estimate cut for both. He also raised his price target on Apple (AAPL) to $450 from $440 to reflect higher iPad estimates.

Whitmore maintains Buy recommendations on Apple and Dell shares, and a Hold on HP shares.

A healthy upgrade cycle for PCs from corporate demand is being offset by further weakening in the consumer market, writes Whitmore. “We believe weak end demand in Europe and the U.S. is directly related to pressure from both the iPad and smartphones, where consumers continue extending the lives on existing hardware.”

Whitmore cut his PC unit growth estimate this year to 4% from 9% previously, and cut his 2012 estimate from 8% to 7% growth.

Following very disappointing guidance from Acer and significant order reductions across the supply chain […] the weakness almost entirely rests in soft consumer PC demand and we have seen no evidence of order slowdowns in corporate PCs. Specifically, supply chain checks suggest 1Q manufacturing trends appear to have declined ~15% Q/Q, with weak end demand and some inventory reductions impacting manufacturing trends. Based on the degree of weakness in consumer NB trends, it appears iPad cannibalization is tracking above our original 30% cannibalization estimate.

Whitmore raised his overall tablet computing estimate for this calendar year to 45 million units from 40 million, but the increase is all for Apple, as he’s skeptical, he writes, that competitors can close the gap with the iPad 2. Whitmore now sees Apple shipping 35 million iPads in this calendar year, up from a prior 30 million. He raised his EPS estimate by 50 cents to $24.50, again for the calendar year.

Whitmore’s estimates for HP are unchanged at $131.4 billion and $5.20, as he’d already figured PCs would be weak. For Dell, his estimates go to $64 billion in sales this calendar year, down from $64.7 billion before.

This morning, Apple shares are down $1.64, or half a point, at $339.50; HP shares are up 25 cents, or 0.6%, at $40.59; Dell shares are up 31 cents, or 2%, at $14.56.

Article courtesy of Tech Trader Daily

Nvidia: ThinkEquity Cuts Estimates On PC Sluggishness

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Shares of Nvidia (NVDA) are coming under particular pressure this morning, down 80 cents, or 4%, at $18.37, with the only obvious negative that I can see being a cut in estimates this morning by ThinkEquity’s Krishna Shankar, who maintains a Hold rating on the stock and cut his price target to $18 from $24.

“PC industry growth appears to be slowing, especially in developed consumer markets, and supply bottlenecks in silicon wafers, chemicals, displays, batteries, etc. due to the Japan earthquake may stunt PC, tablet, smartphone growth,” writes Shankar, and he cut his estimates for this fiscal year ending January of 2012 to $4.08 billion from a prior $4.18 billion in revenue, and to $1.10 in EPS from a prior $1.18.

On the plus side, Shankar notes that Nvidia can still look forward to several design wins for its “Tegra 2″ chip with tablet and phone makers, as well as market share gains in “high-end discrete PC graphics, and continued dominance in professional solutions.” He estimates $385 million in revenue this year from Tegra sales of 21.4 million units at an average selling price of $18.

Article courtesy of Tech Trader Daily

Apple: Jefferies Cuts Estimates On iPhone 5 Wait

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Following a flurry of news reports saying Apple (AAPL) may not introduce an iPhone 5 this summer — see the TechCrunch piece on Monday by MG SieglerJefferies & Co.’s Peter Misek this morning writes that he believes, indeed, that iPhone 5 and that the next version of its operating system, iOS 5, will arrive later in the year, after the summer, and he reduced his estimates for Apple for this fiscal year ending in September and for fiscal 2012 as well.

Misek maintains a Buy rating and a $450 price target.

Apple’s taking longer than expected to incorporate new “cloud”-based features into iOS, things that represent “a significant step forward” for the operating system, Misek speculates.

“In addition to the later OS, we believe Apple wants its next phone to be LTE capable and have a chipset compatible with both AT&T (T) and Verizon [Communications (VZ)],” writes Misek. “Also, we believe the iPhone 5 could contain new chips from Qualcomm incorporating GPS and WiFi on the same chip (and in future the stocker could support bluetooth and NFC [near-field communications]).”  As a result, there will be an iPhone 5 introduction “in September/October,” writes Misek.

I would note that Misek has been saying since early January that Apple might produce an iPhone that runs on 4G, or “Long Term Evolution,” wireless networks by October or November of this year.

Misek cut this fiscal year’s revenue estimate to $103 billion from a prior $107 billion, and cut his EPS estimate to $23.03 per share from a prior $24.17 per share.

Misek “still likes the name,” and expects a “strong” quarterly report next month from Apple, though “we expect guidance as being solid but unlikely blowout due to some hesitation around Japan supply, particularly regarding margins.”

Similar caution about the Q3 forecast was expressed yesterday by Pacific Crest’s Andy Hargreaves.

In a similar vein, BMO Capital’s Keith Bachman today writes he thinks the iPhone will be refreshed “in the September quarter,” though he’s not changing any estimates for Apple. He still sees $97.07 billion in revenue this fiscal year, and $22.30 in EPS.

Bachman sees Apple’s iPad will see a “material” increase in shipments in the June quarter, which could boost top-line growth. He’s expecting 6.1 million iPads were sold this quarter, and says there’s limited upside this quarter given a variety of factors, such as constraints on iPad production, a “reasonable but not a blowout” introduction of the iPhone at Verizon, and Japan’s turmoil.

Bachman reiterated an Outperform rating on Apple stock and a $410 price target.

Apple shares this morning are up 15 cents at $351.11 in early trading.

Article courtesy of Tech Trader Daily

Anadigics Drops 12% On CEO Exit; Needham Trims Estimates

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Shares of wireless chip maker Anadigics (ANAD) are down 60 cents, or 13%, at $4.05 after the company this morning said this morning its CEO, Mario Rivas, has resigned and will be replaced by CTO Ron Michels.

No explanation was given for Rivas’s departure. Anadigics said that it is on track to achieve its Q1 revenue projection of $42 to $44 million. A senior vice president, Greg White, the head of the company’s RF chips business, also resigned, being replaced by John Van Saders, the company’s head of advanced technology.

In a note to clients this morning, Needham & Co. analyst N. Quinn Bolton reiterates a Buy recommendation on Anadigics shares, though he reduced his estimates for the company rather sharply, projecting $200 million in revenue and a 6-cent-per-share loss this year, down from a prior $231 million and 15 cents profit.

“Though we believe Mr. Rivas and Mr. White each resigned for personal reasons, we nevertheless believe the management change represents a near-term overhang on ANAD shares as investors take a “show me” attitude with respect to the new management team.”

Bolton is actually more concerned that Research in Motion (RIMM), Anadigics’s biggest customer at 26% of revenue last year, is moving to cheaper, simpler “Edge”-based smartphones in some regions.

Bolton reiterated a $6 price target on Anadigics stock.

Likewise, Stifel Nicolaus’s Patrick Newton this morning writes that his calls to the company were met with the response that the departures were both for personal reasons. Nevertheless, “we believe recent 1Q guidance, the expected return to an operating loss in the March quarter, and the lack of a clear-cut near-term catalyst likely played a role in the management departures,” he writes.

Newton expects investors will focus on whether or not Anadigics can maintain its market share with RIM, and whether it can gain share at Samsung (SSNLF), which has ben en elusive goal thus far, he writes. Newton maintains a Hold rating on the stock.

Article courtesy of Tech Trader Daily

F5: Ticonderoga Cuts Estimates; Recovery Will Take Time

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Ticonderoga Securities analyst Brian White today reiterates a Neutral rating on shares of F5 Networks (FFIV), writing that after a 34% drop from an all-time high in January, the stock is not cheap, but it’s also not “egregious.”

White cut his estimates this year, as the December quarter, which was an especially bad report for the company, showed the largest loss for F5 in layer 4 through 7 networking “in recent memory.” With Cisco Systems (CSCO) having struggled lately, he expects Cisco to be more aggressive in trying to steal back share from F5.

That could make it harder for F5 to return to very high growth rates of the recent past, citing Dell’Oro Group networking market stats that show, “F5 Networks grew its revenue market share from 34.2% in 1Q08 to 50.2% in 3Q10 before falling back to 46.2% in 4Q10.”

F5 still has “strong growth” ahead of it, he notes, but as for the stock, “we believe the combination of more time and further strong quarterly reports will be the best remedy in healing F5′s stock price.”

White’s estimates for this year go to $1.17 billion in revenue and $3.82 in EPS, from a prior $1.21 billion and $4.02. For 2012, he sees $1.52 billion and $5.29, down from $1.69 billion and $6.23.

F5 shares today are down 67 cents, or 0.7%, at $95.

Article courtesy of Tech Trader Daily