PINNACLE AIRLINES UPGRADED TO OVERWEIGHT FROM UNDERWEIGHT AT JPMORGAN
JPMorgan analyst Jamie Baker says Pinnacle Airlines (PNCL) offers a unique combination of free cash flow and contract certainty, with consolidation prospects superior to those of other regionals. He expects PNCL to generate cash flow per share in excess of $3 this year, next year, and the next; says, with current jet fuel prices, try finding that level elsewhere.
Baker notes that the company's fixed-fee contracts run through 2017 and appear to offer little flexibility to Continental (CAL), Delta (DAL) and Northwest Airlines (NWA). He sees possible industry consolidation, implying fewer hubs and reduced demand for regional feed.
However, Baker notes that majority of PNCL's fleet is owned by NWA; thinks it unlikely NWA would seek to impair productivity of assets it actually owns.
BMO CAPITAL DOWNGRADES PERINI TO MARKET PERFORM FROM OUTPERFORM
BMO Capital analyst Avram Fisher says the downgrade of Perini (PCR) follows recently announced acquisition of privately held Tutor-Saliba (T/S) for $862 million in stock. He notes that the deal values T/S at 9 times forward EBITDA, well above PCR, peer group and other recent private company takeouts.
Fisher says the fact that acquirer and target share same CEO adds to his discomfort with valuation. He says the multiple was justified by strong guidance, but this contingent on robust orders in difficult market and strong margin expansion in 2009.
He notes limited historical financial data on T/S adds to his discomfort with guidance. He says PCR excels at burning off backlog, reliable margins, but this deal requires bet on order cycle, which makes him wary.
CREDIT SUISSE DOWNGRADES CYMER TO UNDERPERFORM FROM NEUTRAL
Credit Suisse analyst Satya Kumar says Cymer (CYMI) has underperformed peers on share loss concerns, but the Street (including him) was hopeful a transition to higher end immersion lithography would help. Instead, his checks suggest the opposite, and share loss is worsening.
Kumar says checks suggest Gigaphoton has secured over 50% immersion unit market share at the largest immersion customers over the last few months; notes he does not think the shift to immersion has helped CYMI. Also, says checks suggest Gigaphoton took over the No. 1 position from CYMI in the the first quarter by shipping 30% more lasers.
Kumar cuts calendar year 2008 estimates to $474 million revenue and $1.34 EPS, from $513 million and $1.78, respectively. He cuts 30 price target to 18.