Amazon.com, Inc.
Citigroup cuts target, reiterates buy
Amazon.com (AMZN) reported third-quarter EPS of 27 cents. Citigroup analyst Mark Mahaney says Amazon's $4.26 billion in revenue was slightly lower than his $4.28 billion estimate and Wall Street's forecast of $4.27 billion; the 27 cents GAAP EPS would have been in line with the Street's 25 cents estimate if adjusted for a $24 million forex re-measurement gain. Mahaney notes the big surprise in the report was Amazon's guidance, with the company lowering midpoint fourth quarter revenue to $6.50 billion vs. the Street's $7.05 billion, and reducing midpoint operating income for the period by 24% to $310 million vs. the Street's roughly $401 million view. Mahaney cut his $1.49 2008 EPS estimate to $1.38, his $1.79 2009 forecast to $1.50, and his $93 price target to $52, implying 21% estimated total return from $43 aftermarket price. The analyst kept his buy rating on the shares.
Cadence Design Systems
Citigroup downgrades to hold from buy
Cadence Design Systems (CDNS) announced an accounting review. Citigroup analyst Terrance Whelan says he's downgrading Cadence to hold from buy and removing it from the firm's Top Picks Live list, as Cadence's accounting review of first quarter revenues removes three of four catalysts behind his upgrade on Aug. 17. Whelan says the accounting review freezes stock buybacks and casts doubt on results/guidance timing. Also, the Oct. 16 management exodus was deeper and potentially more disruptive than he expected. According to the analyst, this leaves Cadence's October cost cuts as a near-term catalyst, but this appears already modeled and "known" by Wall Street. Whelan cut his $11.50 price target on the shares to $5.50.
Tractor Supply Co.
Raymond James ups to outperform from market perform
Tractor Supply (TSCO) posted third-quarter results that beat Wall Street expectations. Raymond James analyst Dan Wewer says Tractor Supply's EPS of 53 cents was well ahead of his and Street's 47 cents forecast. He notes two sources of the EPS upside were a 6.2% same-store sales gain and better-than-anticipated expense management. Wewer notes inventory productivity improved for the fourth consecutive quarter. He says the company's improved inventory management and greater focus on controlling expense increases during this cycle are impressive. The analyst raised his 2008 EPS estimate to $2.58, and 2009's to $2.88, to reflect better-than-anticipated year-to-date performance. He has a $38.50 price target on the shares.