| Also: Analyst opinions on Microsoft and Halliburton From Standard&Poor's Equity Research. Nokia (NOK) Upgrades American Depositary Receipts to 3 STARS (hold) from 2 STARS (sell) Analyst: Inger Soderbom
After further review of fourth quarter results, we believe Nokia has proven its ability to widen margins in the mobile phones unit, which was 60% of fourth quarter total sales. North America handset sales has been an area of weakness, but one in which we believe Nokia will improve with new products. We think the company can better its efficiency in 2007 with actions to relocate manufacturing. While we only see 5% sales growth in 2007, wider margin expectations lead us to raise our 2007 earnings per ADR est to $1.42 from $1.36. Applying a p-e of 16.2 times our estimate, near peers, we are raising our target price to $23 from $18.
McKesson (MCK) Upgrades to 5 STARS (strong buy) from 3 STARS (hold) Analyst: Phillip Seligman
December-quarter operating EPS of 75 cents vs. 63 cents one year earlier, before a LIFO accounting credit, beats our 68 cents estimate on wider-than-expected operating margin. We think Pharma Solutions saw healthy sales growth, after adjusting for a terminated contract, and we are encouraged by its operating margin rise. We look favorably on stronger sales by Med-Surg, a rise in IT bookings, and the Per-Se purchase. We are lifting our fiscal 2007 (ending March) EPS estimate by 10 cents to $2.85. By raising our forward p-e from 19 times to a peer-level 22 times, and our calendar 2007 EPS estimate by 5 cents to $3.15, we boost our target price by $10 to $69.
Microsoft (MSFT) Maintains 3 STARS (hold) Analyst: Jim Yin
Microsoft reports December-quarter EPS of 26 cents vs. 34 cents one year earlier, one cent above our estimate, as revenue rose 6% to $12.5 billion. Results reflect the deferral of $1.64 billion of revenue and 11 cents of EPS related to the guarantee program for Windows and Office. Better-than-expected results were attributed to stronger sales from server&tools, the Microsoft business division, and Xbox. Microsoft provides guidance for fiscal 2007 (ending June) EPS and revenue slightly above Street consensus. We are keeping our fiscal 2007 revenue and EPS estimates at $50.8 billion, and $1.47. We are keeping our 12-month target price at $32.
Halliburton (HAL) Maintains 4 STARS (buy) Analyst: Stewart Glickman
Halliburton posts fourth quarter EPS of 65 cents, a penny above our estimate and 4 cents above Street. Revenues rose 8%, led by higher oilfield services activity in the U.S. and in Europe/Africa/CIS, partly offset by lower activity by KBR for the U.S. military. Oilfield services operating margins widened 350 basis points to 27.3%. We will be interested to hear the company's comments in its fourth quarter conference call Jan. 26 on current demand for oilfield services in North America in light of recent weakness in natural gas prices.
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