BERNSTEIN UPGRADES AAPLE TO OUTPERFORM FROM MARKET PERFORM
Bernstein analyst Toni Sacconaghi says investors appear to be valuing Apple (AAPL) on an earnings multiple, rather than cash flow, which fundamentally undervalues the company given huge deferred revenue growth from the iPhone.
Sacconaghi estimates iPhone alone in fiscal year 2009 (September) will add $2.25-$3.40/share to cash flow above earnings, depending on the number of iPhones sold. Excluding about $23/share cash balance, AAPL trades at forward EV/FCF of around 9, which he believes is lower than the overall market and in line with IBM (IBM) and Hewlett-Packard (HPQ), despite AAPL's superior long-term growth prospects.
He sees $5.21 fiscal year 2008 EPS. He cuts $175 target to $135.
NEEDHAM UPGRADES INTUITIVE SURGICAL TO BUY FROM HOLD
Needham analyst Ed Shenkan says his upgrade of Intuitive Surgical (ISRG) reflects increased confidence in sales of ISRG's da Vinci surgical systems. He notes, in an initial survey of 60-plus hospitals, 29% expected to buy an additional da Vinci system within the next two years, including 15% that expected to buy in one year.
Shenkan expects ISRG's value to rise over the next 12 months as hospitals continue to buy da Vinci systems and core prostate and OB/GYN procedure growth continues.
He raises $5.12 2008 EPS estimate to $5.15, $6.50 for 2009 to $6.72. He has a $225 target price on the stock.