Shares of JDS Uniphase (JDSU) are down 88 cents, or 7%, at $12.26 this morning despite the company last night beating Q2 estimates and offering an in-line view for Q3′s results.
The stock got one downgrade this morning, from UBS’s Nikos Theodosopoulos, who cut his rating on the shares to Neutral from Buy, though he raised his price target to $14.50 from $13.
An area of weakness was pricing on optical component orders, he notes, as expressed in the Q3 profit outlook:
Optical component contract negotiations were particularly intense for 3Q with a ~6% quarter-over-quarter ASP decline expected (avg~2-4%). 3Q operating margin was guided to 6-7.5% vs. our/ Street estimates of ~10%. Lower revs + higher opex in CommTest also weigh on outlook.
Theodosopoulos says he has a hard time giving the stock more than a 15 times multiple, which at 15 times the calendar 2013 estimate for 96 cents, is $14.50.
On the other hand, A different perspective is offered by Patrick Newton of Stifel Nicolaus, who reiterated a Buy rating this morning and raised his price target to $19 from $17.
Newton thinks the disappointing operating margin outlook this quarter is the result of things that are “transitory in nature.”
“Despite continued uncertainty driven by macroeconomic concerns in both Optical and CommTest end markets,” he writes, “JDSU recorded the highest total bookings in more than a year.”
“Our analysis indicates JDSU is likely to see continued new product momentum and leverage its IP and scale advantages.”
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