Osha Major: New Merrill Analyst Takes Positive Stance on Intel
SAN FRANCISCO -- Less than a month after replacing Thomas Kurlak, Merrill Lynch semiconductor analyst Joe Osha has weighed in with a largely positive view on Intel (INTC) - Get Report.
Osha started his coverage on the stock with a near-term accumulate rating and a long-term buy rating and set a 12-month price target of 142. He says worries about the current quarter "seem overblown" and expects earnings for the year to be above the consensus estimate. Intel was up 2, or 1.7%, to 122 1/2.
Osha told
TheStreet.com
that he expects unit growth in the third and fourth quarters "will blow people away" and lead to earnings of $4.73 a share for the year, above
First Call's
consensus forecast of $4.68. For the first quarter, he expects earnings to come in at $1.10 a share, which is in line with the consensus estimate.
Osha's ratings on Intel differ from Kurlak's in the long-term outlook: Osha rates the company a long-term buy, whereas Kurlak recommended it as a long-term accumulate. Kurlak's price target when he upgraded Intel last
December was 144. Kurlak left Merrill Lynch for the
Tiger Capital Management
hedge fund early in
February.
Osha also said today that he is "more cautious" on
Advanced Micro Devices
(AMD) - Get Report
and
National Semiconductor
(NSM)
. He rates both stocks neutral for both the intermediate and the long terms.
Also weighing in on Intel is
Piper Jaffray
analyst Ashok Kumar, who suggested today that rumors of the company's demise are "much exaggerated." Kumar has a strong buy rating on Intel, but notes some caution for the current quarter because of "what is shaping up to be a disastrous quarter for
Compaq
(CPQ)
." He said that if Compaq does experience these anticipated problems, Intel could fall to longer-term support under 100.
In a separate report on Compaq, Kumar reduced his estimates for first-quarter revenue to $9.4 billion from $9.6 billion and earnings to 20 cents a share from 35 cents. That compares to a First Call consensus estimate of 33 cents a share.
Kumar said that the downside in Compaq "is limited to the mid-20s. However, with the market softening in the June quarter and ongoing structural changes at the company, Compaq at best represents dead money."
Compaq was down 1 1/16, or 3.20%, to 32 3/16. The stock has dropped sharply since Jan. 27, when it was trading at 51 1/4.
Kumar has been rather aggressive in his estimate changes of late. He increased his first-quarter earnings estimate for
Gateway
(GTW)
to 90 cents a share from 59 cents on Feb. 22. Kumar lowered that estimate to 64 cents on March 15. The
First Call
consensus is for earnings of 60 cents a share for the company, which will report its earnings next month.
However, Kumar was right on the
money regarding
Dell
(DELL) - Get Report
when he predicted that the company's sequential revenue growth rate would not be maintained in its fourth quarter. When it reported earnings Feb. 16, the company did show a sequential revenue shortfall.
Other Movers
Shares of
CMGI
(CMGI)
were soaring after the company announced a 2-for-1 stock split after the close Wednesday. The stock was lately trading up 15 7/16, or 8.8%, to 190 13/16. Investors demonstrated some disappointment last week when the company did not announce a stock split after reporting its second-quarter earnings.
Shares of
Lycos
(LCOS)
are down today on reports that CMGI will let the proposed merger of Lycos and
USA Networks
(USAI) - Get Report
go to a vote rather than proposing another plan.
There will be no IPO mania for
iVillage
-- at least not today. The
Securities and Exchange Commission
delayed the pricing of the company's offering Wednesday night, likely delaying its debut until Friday. iVillage is a Web site targeted to women. Pricing of the offering was raised to the range of 22 to 24 from 12 to 14, suggesting strong interest.