Financial ratings wrap-up: Verizon, Palm, Qualcomm and more
July 30 2008 - 5:59 am ET | Kristen Beckman | RCR Wireless News
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The following list includes ratings changes and financial information for wireless companies announced this week by investment-banking and financial-services firms.
Carrier
--RBC Capital Markets lowered its price target on Verizon to $37 from $43 on strong wireless results but mixed wireline. The firm raised its EPS estimates on the carrier to $2.64 from $2.62 for 2008 and to $2.93 from $2.90 for 2009. R.W. Baird lowered its price target on Verizon to $39 form $42 but raised its EPS estimates to $2.61 from $2.58 for 2008 and to $2.98 from $2.97 for 2009.
--R.W. Baird slightly increased its estimates on AT&T after the carrier reported solid second-quarter results. The company’s new EPS estimates are $3, up from $2.99, for 2008 and $3.25, up from $3.24, for 2009. Morgan Stanley lowered its price target on AT&T to $41 from $44 on intensifying wireline pressures. Credit Suisse First Boston lowered its estimates on AT&T, calling the carrier’s quarter ‘mixed.’ New estimates are $2.98, down from $2.99, for 2008 and $3.23, down from $3.35, for 2009.
Handset and infrastructure vendors
--Standard & Poor’s lowered its corporate credit rating on Palm to B- from B and removed its ratings from CreditWatch. The outlook is negative. "The actions reflect weak sales, ongoing operating losses, and negative free cash flows, as well as market challenges that could continue to pressure the company's operating results in the intermediate to longer term," said Standard & Poor's credit analyst Bruce Hyman. J.P. Morgan raised its estimates on Palm on strong demand. New estimates are a loss of 12 cents on sales of $329.3 million from a loss of 13 cents on sales of $316.8 million.
--Lehman Brothers lowered its 2008 EPS estimate on Ericsson to 73 cents from 76 cents but increased its 2009 EPS estimate to 83 cents from 81 cents on macro concerns affecting mobile operators.
Other
--Deutsche Bank raised it price target on Atheros to $35 from $30 after the carrier reported financial results ahead of expectations.
--Lehman Brothers adjusted its estimates on Crown Castle after the company reported solid quarterly financial results. New estimates are a loss of 1 cent rather than a loss of 25 cents for 2008 and profit of 10 cents rather than profit of 13 cents for 2009. Credit Suisse First Boston raised its estimates on Crown to 7 cents for 2008 and to 6 cents from 4 cents for 2009.
--R.W. Baird raised its estimates on PCTel after the company reported revenue and EPS ahead of expectations. New estimates are 49 cents rather than 48 cents for 2008 and 60 cents rather than 55 cents for 2009.
--Lehman Brothers raised its price target on RadioShack to $17.50 from $15 after the company reported solid second-quarter results. It also increased its estimates on the retailer to $1.74 from $1.61 for 2008 and to $1.73 from $1.52 for 2009. Deutsche Bank raised its price target on RadioShack to $18 from $14.
--Deutsche Bank raised its price target on Qualcomm to $65 from $60 on news the company settled its legal disputes with Nokia, and then further raised its price target to $70 after the company reported solid financial results. Oppenheimer raised its price target on the company to $61 from $56. Lehman Brothers lowered its 2008 EPS estimate on Qualcomm to $2.12 from $2.15 but raised its 2009 EPS estimate to $2.68 from $2.38. Goldman Sachs raised its price target on the company to $64 from $56.
--R.W. Baird raised its price target on F5 Networks to $37 after the company reported results ahead of expectations. Baird also raised its EPS estimates on the company to 89 cents from 84 cents for 2008 and to $1.10 from $1.03 for 2009.
--RBC Capital Markets downgraded Sierra Wireless to perform from outperform after the company offered disappointing guidance. The firm also lowered its price target on the company to $15 from $25 and its estimates to $1.24 from $1.44 for 2008 and to $1.31 from $1.67 for 2009. Oppenheimer lowered its price target on Sierra to $16, down from $22. New estimates are $1.45 rather than $1.61 for 2008 and $1.50 rather than $1.81 for 2009.
Broadpoint Securities raised its rating on Broadcom Corp. to buy from neutral and assigned it a $34 price target on news the company’s second-quarter revenues came in above consensus estimates. The firm also raised its estimates on Broadcom to $1.73 on revenues of $4.9 billion from $1.48 on $4.5 billion for 2008 and to $1.88 on $5.5 billion from $1.63 on revenues of $5.1 billion for 2009. R.W. Baird raised its estimates on Broadcom to EPS of $1.76 from $1.47 for 2008 and to $1.72 from $1.55 for 2009. Deutsche Bank increased its price target on Broadcom to $30 from $28.
--R.W. Baird downgraded ADC Telecommunications to neutral and lowered its price target to $14 after the company lowered 2008 guidance. The firm said the slight shortfall in revenue and larger shortfall in EPS suggests a mix shift rather than lower capex as the driving force behind the guidance revision. Baird also lowered its estimates on ADC to $1.15 from $1.31 for 2008 and to $1.20 from $1.38 for 2009. Credit Suisse First Boston lowered its price target on ADC to $13 from $16 and reduced its estimates to $1.13 on revenues of $1.5 billion from $1.29 on $1.53 billion for 2008 and to $1.08 on $1.55 billion from $1.33 on $1.59 billion for 2009.
--R.W. Baird raised its 2008 EPS estimate on Plantronics to $1.44 from $1.34 after the company announced financial results that exceeded expectations.
--R.W. Baird raised its estimates on Tellabs after the company released in-line financial results for the second quarter. New estimates are 17 cents rather than 9 cents for 2008 and 16 cents rather than 10 cents for 2009.
