Monday, November 12, 2007

S&P Lowers 12 month target to $3.5

Thanks to Rspen for posting this early today.

S&P has now cut their 12 month target price from $11 early this year all the way to $3.5 now. I can understand the cut due to disappointment in earnings pushout. But, not due to sum of the parts analysis, specially after their investments have gone up by over $100m. Remember, that sum of the parts analysis at $11 was just early this year! Definitely does not make sense.

Now, lets take a look at their estimates going forward. For 2008, they estimate 2% gains from 2007. That obviously has to go up for a couple of reasons. Q3 and Q4 revs are significantly higher than current estimates. Also, book-to-bill have been 1 to 1.2. They do have a 16% GM estimate but that could change significantly depending on mix and timing. Overall, they have a 87 cent loss for 2008. Thats actually higher than consensus right now but the consensus should go up some. It will be interesting to see how estimates are revised after Q3....

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