August 1, 2008
Analyst Actions: Schering-Plough, Dell, Tetra Tech
MERRILL UPGRADES SCHERING-PLOUGH TO BUY FROM NEUTRAL
Merrill Lynch analyst David Risinger says his upgrade of Schering-Plough (SGP) is based on higher EPS estimates, limited stepdown in Vytorin Rx after negative SEAS [Simvastatin and Ezetimibe in Aortic Stenosis] study, healthy core business trends, including compelling pipeline opportunities ahead.
Risinger expects two potential blockbusters to be approved over the next year, which suggests a better near-term pipeline outlook for SGP than any other U.S. major pharma companies. He says Sugammadex [Bridion for anesthesia reversal] should be approved by FDA in August 2008 [EU approved July 29]; Golimumab [once monthly injectable for rheumatoid arthritis] should be approved in 2009.
He raises $1.47 2008 EPS estimate to $1.56, $1.61 for 2009 to $1.68; and $20 price target to $23.
COWEN UPGRADES DELL TO OUTPERFORM FROM NEUTRAL
Cowen analyst Louis Miscioscia says he believes Dell (DELL) shares can outperform the market by 25% in next year. He raises $1.56 fiscal year 2009 [January] EPS estimate to $1.70 and $1.80 fiscal year 2010 to $2.07, which is $0.11 and $0.23 above consensus, respectively.
He bases this on the success Dell is having in bringing down operating expenses, gaining share, growing revenues in consumer, small/medium businesses [SMB] and emerging markets [EM]. He notes Dell's efforts to grow in consumer retail, SMB and EM are starting to pay off: in the first quarter, consumer grew 21% and 47% for EM. For fiscal year 2009, he sees consumer growing 20% to $12.5 billion and EM up 37% to $8.6 billion.
He notes these two areas will provide 340 basis points and 380 basis points of growth for 720 basis points combined.
JANNEY MONTGOMERY UPGRADES TETRA TECH TO BUY FROM NEUTRAL
Janney Montgomery analyst Debra Coy says Tetra Tech (TTEK) posted $0.27 third quarter EPS, beating her $0.23 estimate and the Street's guidance of $0.22-$0.24. She says TTEK posted another upside EPS surprise, the third in a row.
Coy notes that management said it hadn't seen it coming, with some one-time items, acceleration in some programs bringing the quarter in above its own forecast. She says backlog was up in the quarter, despite very strong revenue pull-through and organic growth jumped to double digit levels. She doesn't want to throw caution to the wind, particularly in an uncertain economic environment, but acknowledges having been too conservative in her outlook for TTEK.
She raises $0.94 fiscal year 2008 [September] EPS estimate to $1.00 and $1.06 for 2009 to $1.13.