The following list includes ratings changes and financial information for wireless companies announced this week by investment-banking and financial-services firms.
Carriers
Merrill Lynch lowered its fiscal 2006 EPS estimate on Alltel Corp. from $3.58 to $3.45 following mixed fourth-quarter results. Robert W. Baird introduced forecasts for 2006, with revenue growth of 9.6 percent vs. pro forma 2005 results and EBITDA growth of 10 percent. Baird expects EPS of $2.29 during 2006, down from $3.40, and EPS of $2.67 in 2007, down from $3.72.
Robert W. Baird raised its rating on BellSouth Corp. from neutral to outperform to reflect improving margins at Cingular.
RBC Capital Markets raised its EPS estimates on Verizon Communications for 2006 and 2007 from $2.71 and $2.95 to $2.78 and $3.08, respectively. The increases reflect higher wireless EBITDA assumptions offset by EPS dilution from the integration of MCI, said RBC. Prudential Equity Group lowered its fiscal 2006 EPS estimate on Verizon to $2.43 from $2.58 after the carrier reported fourth-quarter results. Robert W. Baird lowered estimates on Verizon for 2006, from $2.63 to $2.57, and introduced a 2007 EPS estimate of $2.68.
Prudential Equity Group raised its EPS estimates on AT&T Inc. for fiscal 2005 and 2006 from $1.68 to $1.72 and from $1.95 to $1.96, respectively, after the company released fourth-quarter financial results. Robert W. Baird also raised estimates on AT&T for 2006 and 2007. The firm’s new estimates are $1.91, up from $1.90 for 2006 and $2.06, up from $2.02, for 2007.
Infrastructure and handset vendors
RBC Capital Markets downgraded L.M. Ericsson from outperform to sector perform and reduced its share price target on the company from $38 to $37. The firm noted it is increasingly concerned about the growth of the wireless infrastructure market during the second half of this year, and said it believes Ericsson may face tougher competition in North America next year. CIBC World Markets raised its revenue and EPS estimates on Ericsson after the vendor reported fourth-quarter results that were above expectations. CIBC said it is comfortable with Ericsson’s execution and that it believes the company is well-positioned to gain share in the infrastructure market. CIBC’s new revenue and EPS estimates for 2006 are $24.2 billion and 22 cents per share, respectively. Harris Nesbitt raised its 2006 EPS estimate on Ericsson to $2.25 from $2, and its 2007 EPS to $2.40 from $2.11. The firm raised its price target on the company to $38 per share. Piper Jaffray raised its price target on Ericsson from $38 to $40 per share and increased its 2006 estimates on the vendor.
Other
Lehman Brothers raised price targets on four wireless tower companies. Lehman raised Crown Castle International‘s price target to $35 from $30 per share; SBA Communications‘ price target to $25 from $20; American Tower‘s price target to $35 from $30; and Global Signal‘s price target to $50 from $46. Lehman said Verizon, Cingular and T-Mobile USA’s strong fourth-quarter net add results, as well as the firm’s channel checks, show strong demand for new tower leases.
Avondale Partners upgraded its opinion on Sierra Wireless from market perform to market outperform and raised its 2006 estimates on the company from a loss of 8 cents per share to a return of 25 cents. Avondale said it believes Sierra’s success with HSDPA PC cards and embedded modems will continue in the near term due to acceleration in 3G wireless data adoption. Piper Jaffray also raised its rating on Sierra, from market perform to outperform and raised its price target from $13 to $15. Piper Jaffray noted encouraging HSDPA trends. RBC Capital Markets raised its price target on the company from $12 to $13 per share. Harris Nesbitt raised its 2006 pro forma EPS estimate to 30 cents from a loss per share of 2 cents and raised its 2007 EPS estimate to 47 cents from 18 cents.
Piper Jaffray lowered its rating on Novatel Wireless Inc. from outperform to market perform after the company announced fourth-quarter results that fell below expectations for EPS. Piper Jaffray also reduced 2006 estimates on the company from 70 cents on $221 million in revenues to 42 cents on $218 million in revenues. It also dropped 2007 estimates from 87 cents on $288 million in revenues to 63 cents on $288 million in revenues. The firm further lowered its price target on Novatel from $17 to $12.
