S&P REITERATES HOLD OPINION ON SHARES OF CISCO SYSTEMS
CSCO; $29.88
Board authorizes an additional $10 billion in stock repurchases, which increases the total authorized program amount to $62 billion. With an average purchase price of $19.89 since its inception in September, 2001, a more than 30% discount to the $30 level the stock trades at currently, we view the buyback program as largely
shareholder friendly. However, we note that only about 43% of the total 2.3 billion shares repurchased since program inception yielded a reduced share count, reflecting mainly the issuance of stock option grants. Based on P/E analysis, we keep our 12-month target price at $33. /A. Bensinger
S&P MAINTAINS STRONG BUY OPINION ON AT&T SHARES
T; $39.37
AT&T has completed its cash-based acquisition of rural
roaming partner Dobson Communications, ahead of the year-end closing we had expected. AT&T plans to complete the rebranding effort by mid-2008. While the deal should add only 2.5% more wireless customers to AT&T's base, we see the company reaping benefits from reduced roaming costs and improved churn. We look for AT&T to expand its operating margin in 2008 on greater efficiencies in both its wireless and wireline segments, along with modest revenue growth. We are keeping our 12-month target price $44, aided by a 3.6% dividend yield. /T. Rosenbluth
S&P MAINTAINS STRONG BUY OPINION ON SHARES OF FEDEX
FDX; $96.96
FedEx lowers its fiscal 2008 (May) EPS guidance to $6.40-$6.70, from $6.70-$7.10, citing an 8% rise in fuel costs since it announced August-quarter results. FedEx also says trends in freight segment remain weak. We are cutting our fiscal 2008 and fiscal 2009 EPS estimates by 35 cents each, to $6.65 and $7.65. Despite these current negative factors, we think FedEx will start to see some benefits from what we expect to be ongoing global economic gains, and a bit of a downturn in fuel prices. We keep our 12-month target price at $140,
a little under 20X our calendar 2008 estimate, as we move our valuation period forward. /J. Corridore, M. Jaffe
S&P REITERATES BUY RECOMMENDATION ON SHARES OF TD AMERITRADE
AMTD; $19.21
AmeriTrade reports record October monthly trading volumes, with daily average revenue trades of 336,000, up 45% year-over-year and 27% over September. Client assets, up 16% year-over-year, and average fee-based investment balances, up 34%, also saw strong growth. We believe heightened levels of market volatility are driving stronger trading activity, a trend we see as likely to continue in November. We also expect AmeriTrade to be a primary beneficiary of potential client and asset defections from E*Trade Financial (ETFC), which should positively impact AmeriTrade's revenue and earnings. /J. Willey
S&P REITERATES BUY OPINION ON AMERICAN DEPOSITARY SHARES OF THE9 LTD
NCTY; $24.87
Third quarter per-ADS earnings of 17 cents vs. 33 cents falls short of our 33 cents estimate. Revenues rose 36% as World of Warcraft, including WOW: The Burning Crusade, and Soul of The Ultimate Nation, supported notable online game service revenue growth. However, product launch and option expenses hurt profits. We reduce our 2007 per-ADS profit forecast by 34 cents to $1.07
on narrowed margins we now see, and as a result, we trim our 12-month target price by $2 to $40. Even so, we think The9's broader game offerings will boost long-term growth, and we continue to view its shares as undervalued. /S. Kessler, C. Montevirgen
S&P MAINTAINS BUY RECOMMENDATION ON SHARES OF GARMIN
GRMN; $96.58
Shares are up about 15% this morning
following Garmin's announcement it is no longer pursuing a buyout of map-maker Tele Atlas, and that it has signed a long-term contract with Tele Atlas's main competitor, NAVTEQ (NVT). The NAVTEQ agreement runs through 2015, with an option to extend to 2019. We think Garmin executed a well thought out strategy that ultimately allowed it to benefit from its stock investment in Tele Atlas,