GOLDMAN RATES JPMORGAN CHASE & CO. NEUTRAL; SAYS RESULTS GENERALLY AS EXPECTED
Goldman Sachs analyst William Tanona says JPMorgan Chase & Co.'s (JPM) first quarter EPS is $0.02 lower than his estimate. He says revenue in every business segment was in-line except for asset management, which accounted for the entire EPS miss. But all told, he says results are generally as expected.
Clearly there was some meaningful deterioration in consumer credit quality trends, but this should not come as a surprise given the environment and guidance, Tanona says. Relative to many of its peers, he says JPM appears to be managing the credit storm very well, and management continues to be relatively conservative, adding meaningfully to reserves. The biggest areas of concern for him remain home equity portfolio and cards.
He will look for more color on the conference call. His estimates and price target are under review.
CARIS CUTS SEAGATE TECHNOLOGY TO AVERAGE FROM ABOVE-AVERAGE
Caris analyst Shebly Seyrafi says the downgrade of Seagate Technology (STX) reflects the company's disappointing outlook, with gross margins expected to decline to 23% in the fourth quarter from almost 27% in the third quarter. He notes, however, as the year progresses, STX will benefit from better mobile participation, seasonality.
Seyrafi says $3.1 billion third quarter revenue is below his and consensus $3.25 billion estimates, and the company's Mar. 4 expectation of $3.2-$3.3 billion. He says $0.70 non-GAAP EPS compare to his $0.71 estimate, within guidance. He notes alarming inventory increase, with total inventory level of $1.073 billion up 29% quarter-to-quarter as inventory turnover fell to 8.5x from 12.1x in the second quarter.
He cuts $2.80 fiscal year 2008 (June) non-GAAP EPS estimate to $2.65, $2.60 fiscal year 2009 to $1.88, and 25 price target to 18.
UBS KEEPS BUY ON INTEL
UBS analyst Steven Eliscu says Intel (INTC) posted better-than-expected first quarter results and second quarter guidance driven by strength in its new 45nm products, as well as surprising strength in North America, Europe and Asia.
Eliscu notes he remains concerned about the macro-environment, but with the first quarter earnings risk out of the way and INTC poised to drive margins higher in the second half of 2008 with possible higher average selling prices, he reiterates buy with a 26.50 target price.
He raises $39.2 billion 2008 revenue estimate to $39.7 billion, but trims $1.24 EPS to $1.22 to reflect a higher tax rate and lower interest income. He increases 2009 view to $43.0 billion revenue and $1.54 EPS from $42.7 billion and $1.52, respectively.
BROADPOINT CAPITAL REITERATES BUY ON CV THERAPEUTICS
Broadpoint analyst David Webber says he reiterates a buy opinion due to CV Therapeutics' (CVTX) sale of 50% of U.S. royalties from its heart-imaging agent Lexiscan to TPG-Axon Capital for $185 million. He notes CVTX will earmark $100 million to pay down debt and $85 million for operations, obviating dilutive financings.
Webber says the new cash supply should strengthen CVTX's hand in pursuing marketing partners for its chronic angina drug Ranexa in both the U.S. and Europe, where CVTX expects approval by mid-year. He notes that CVTX, which fields a cardiology salesforce, would like a partner to reach primary care physicians.
He narrows $1.28 2008 loss estimate to $1.18 loss. He has a 15 price target on the stock.