Weekly wireless ratings roundup

Kristen Beckman

Following are ratings changes and other financial information for wireless companies announced this week by investment banking and financial firms.

• CIBC raised its estimates on Powerwave Technologies Inc. following the company’s strong second-quarter report. CIBC said it expects revenues and earnings per share for 2005 to be $746 million and 47 cents respectively, up from previous estimates of $717 million and 40 cents respectively. CIBC maintained its sector-perform rating on the company.

   

• Prudential Equity raised its price target on Sprint Corp. from $30 to $33 and earnings per share estimates for 2005 from $1.42 to $1.51.

   

• Robert W. Baird raised its price target for Lightbridge Inc. from $8 to $9 on second-quarter results ahead of expectations.

   

• Robert W. Baird raised its price target on U.S. Cellular Corp. from $45 to $51 and maintained its neutral rating on the company following the carrier’s second-quarter report.

   

• Standard & Poor’s Ratings Services raised its corporate credit rating on Vivendi Universal S.A. to BBB to reflect ongoing improvements in the group’s financial structure and business performance. The outlook on Vivendi is stable.

   

• Standard & Poor’s Ratings Services changed its ratings on several wireless tower firms this week. S&P raised its ratings on American Tower Corp., including its corporate credit rating, which was raised to BB from B. The company remains on CreditWatch with positive implications. S&P said American Tower’s corporate credit rating will be raised to BB+ upon completion of its merger with SpectraSite Communications Inc. S&P also raised its ratings on SBA Communications Corp. The company’s corporate credit rating was raised from CCC+ to B+. SBA’s ratings were removed from CreditWatch, where they were placed with positive implications in April. SBA’s outlook is stable. Finally, S&P raised its ratings for SpectraSite’s corporate credit to BBB from BB-. The company’s ratings were removed from CreditWatch, and the outlook is stable.

   

• CIBC World Markets raised its full-year 2005 estimates on Sirenza Microdevices Inc. to $63.6 million from $60 million based on a sales rebound during the second quarter. CIBC said it also believes orders from wireless equipment original equipment manufacturers should increase throughout the remainder of the year.

   

• Standard & Poor’s Ratings Services affirmed its A-/A-2 corporate credit rating on France Telecom S.A. following news that the company plans to acquire a majority stake in Auna Operadora de Telecomunicaciones S.A., which owns Spanish mobile operator Retevision Moviles S.A.

   

• Goldman Sachs trimmed its earnings-per-share forecast for Verizon Communications Inc. to $2.48 this year and to $2.52 next year. The firm rates Verizon in-line. Morgan Stanley lowered its 2005 EPS estimates to $2.55 from $2.57, 2006 EPS estimates to $2.52 from $2.55 and 2007 EPS to $2.60 from $2.54.

   

• CIBC World Markets raised its 2006 fiscal-year revenue and earnings per share estimates on RF Micro Devices to $710 million and 10 cents per share from $677.5 million and 1 cent per share respectively. The changes followed a strong June quarterly report from the company. Pacific Growth Equities maintained its overweight rating on RFMD and raised its 2006 estimates for the company, saying it expects RFMD’s position in the EDGE and W-CDMA handset market to strengthen.

   

• Robert W. Baird maintained its neutral rating on Flextronics International Ltd. despite the company reporting better-than-expected quarterly financial results. RW Baird said it remains cautious on the company due to an uncertain near-term revenue outlook and potential costs associated with new program wins.

   

• Robert W. Baird maintained its outperform rating on Tellabs Inc. and raised its price target on the company to $14 following its good second-quarter report. Baird also raised its earnings per share estimates on Tellabs to 55 cents from 40 cents for 2006. First Albany Capital reiterated its buy rating on Tellabs and raised its price target on the company from $11.50 to $12. UBS raised its price target on Tellabs to $11.50 and maintained its buy rating on the company.

   

• Robert W. Baird raised its subscriber addition forecast for Verizon Wireless to 7.15 million from 6.4 million but lowered its wireless earnings before interest, taxes, depreciation and amortization forecast from $12 billion to $11.7 billion due to higher gross adds and lower ARPU. Baird rates Verizon neutral.

   

• Piper Jaffray lowered its rating on InfoSpace Inc. to market perform from outperform on in-line second-quarter financials and disappointing guidance. Wireless revenues came in below expectations, which the company attributed to slower sales of music downloads. Piper Jaffray also reduced its price target on the company from $55 to $26. First Albany Capital maintained its neutral rating on the company.

   

• Avondale Partners lowered its estimates on Novatel Wireless Inc. due to gross margin pressure.

   

• First Albany Capital raised its rating on Sun Microsystems Inc. to neutral from underperform on results that were better than expected for the company’s fiscal fourth quarter.

   

• Prudential Equity Group raised its price target on Nextel Communications Inc. from $31 to $39.

   

• Prudential Equity Group raised its price target on Texas Instruments Inc. to $37 from $33. The company is rated by Prudential at overweight.

   

• UBS increased its price target on L.M. Ericsson from $41.19 and maintained its buy rating on the company. The firm also lowered its price target on Nokia Corp.to $19.48 and reiterated its buy rating on the company.

   

• Smith Barney Citigroup upgraded M-Systems from hold to buy.