SANDLER O'NEILL CUTS ESTIMATES, TARGET ON AMERICAN EXPRESS
Sandler O'Neill analyst Michael Taiano says he expects American Express' (AXP) billed business volume and credit performance to worsen in the fourth quarter and into next year. While these two items should be offset by lower operating costs, a spike in funding costs in the past few months has created additional earnings headwinds.
Taiano cuts $2.82 2008 EPS estimate to $2.62, $3.35 for 2009 to $2.30; and $40 price target to $30.
He believes AXP has sufficient access to liquidity through its bank units. Nonetheless, the events over the past few weeks are likely to erode consumer confidence, which could exacerbate deceleration in consumer and corporate spending. He keeps a hold opinion on the stock.
FBR CAPITAL CUTS TARGET FOR LINEAR TECHNOLOGY
FBR Capital analyst Craig Berger says Linear Technology's (LLTC) $0.48 first quarter EPS topped his estimate by $0.03, aided by $0.02 tax credit, on in-line revenue. But he notes LLTC guided second quarter revenues to an "awful" 10%-20% drop sequentially, driving a mid-point of $264 million ($50 million below prior Street estimate.).
Berger says LLTC saw a drop in bookings across all end markets in late September and October, citing the credit crisis. He is surprised by severity of LLTC's revenue view, given healthier views posted by Intel (INTC) and Altera (ALTR).
He cuts $1.76 fiscal year 2009 (June) EPS estimate to $1.55, $1.92 fiscal year 2010 to $1.60; and $32 target price to $26. He keeps market perform opinion.
MERRILL DOWNGRADES EBAY TO UNDERPERFORM FROM NEUTRAL
Merrill Lynch analyst Justin Post says while his $1.87 2009 EPS estimate for eBay (EBAY) is only modestly below the $1.90 consensus forecast, with gross merchandise value (GMV) on threshold of declining, eBay faces an increasing need to restructure the high-margin marketplace to drive growth given the ongoing slowdown in transactions.
He notes further restructuring of seller fees (lowering take rates) to attract larger sellers (i.e., Buy.com), or a technology upgrade to better compete with other platforms (like Amazon.com (AMZN) could drive marketplace margins lower than current ests. He has a $19 price objective.
CREDIT SUISSE CUTS PRICE TARGET FOR JONES APPAREL GROUP
Credit Suisse analyst Omar Saad says less than three months after posting an $0.08 EPS surprise, Jones Apparel Group (JNY) preannounced third quarter EPS $0.18 below consensus and cut $1.20-$1.35 2008 EPS view to $0.93-$0.98, citing deteriorating retail environment, lower September comps, expectations for high promotional activity in the fourth quarter.
Saad says while this quarter's trends disappointed even his own low forecasts, the environment could become even worse than management embedded in its updated guidance.
He cuts $12 price target to $10. He also lowers $1.20 2008 EPS estimate to $0.90 and $1.30 2009 to $0.90. He maintains underperform opinion.