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Analyst Actions: Bankrate, American Mortgage Acceptance, LDK Solar

Posted on: Tuesday, 11 December 2007, 12:00 CST

NEEDHAM REITERATES BUY ON BANKRATE

Analyst Mark May says Bankrate (RATE) announced the purchase of two companies for a total of $28.7 million and the potential for $9 million in earn-outs in two years. He notes Nationwide Card Services Inc. markets credit cards via the Web, and Savingforcollege.com provides information about 529 college savings plans; the acquisitions are expected to be accretive in 2008.

May says Bankrate is providing preliminary 2008 guidance of $140-$145 million revenue and $60-$65 million EBITDA, above his current estimates of $118 million and $55.6 million, respectively. He says he likes the strategic and financial profile of these deals.

He reiterates a buy opinion and $53 target price; he notes his EPS forecasts of $1.48 for 2007 and $1.70 for 2008 may change after today's 11 am conference call.

RBC CAPITAL DOWNGRADES AMERICAN MORTGAGE ACCEPTANCE TO UNDERPERFORM FROM SECTOR PERFORM

Analyst Jason Arnold says due to liquidity challenges in the fourth quarter of 2007, American Mortgage Acceptance (AMC) was forced to sell $95 million in assets at an estimated loss of $13.5 million, will not pay a dividend in order to conserve capital. This, combined with anticipated impact of spread widening, is estimated to reduce book value to $4.29 per share, from $7.62 in the prior quarter.

Arnold cuts his $0.77 2007 FFO estimate to $0.49, given earnings impact, interest rate swap impairment. Now expects $1.92 2007 GAAP loss. He says, if credit market conditions erode further from here, liquidity challenges may force the company to sell additional assets at a loss, which may lead to further earnings/book volume impairment. He cuts $4.00 target to $2.00.

NEEDHAM REITERATES STRONG BUY ON LDK SOLAR

Analyst Pierre Maccagno says LDK Solar's (LDK) 10-year contract with Q-Cells is impressive. He also notes that a meeting with LDK management in the People's Republic of China on Friday successfully addressed several issues.

Maccagno sees revenues growing at a 80%-plus compounded annual growth rate [CAGR] in 2007-2010. He thinks the company is favorably positioned in the photovoltaic food chain at the higher end of margins with potential for increases by 2009. He believes a solid supply deals for raw polysilicon and ingot growing equipment covers 90% and 70% of his 2007 and 2008 revenue estimates, respectively. He also says LDK's customer base is becoming less concentrated and more diverse geographically with total output for 2007 and 2008 100% sold out.

He sees EPS of $1.39 for 2007 and $1.89 for 2008. He has a $65 price target on the stock.

Source: Business Week

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