The following list includes ratings changes and financial information for wireless companies announced this week by investment-banking and financial-services firms.
Click here for wireless ratings from past weeks from RCR Wireless News.
Carrier
- RBC Capital Markets lowered its 2006 EPS estimate on Alltel Corp. to $3.36 from $3.52 after the company reported solid first-quarter results that included strong wireless subscriber growth but lower-than-expected EBITDA. The firm also lowered its consolidated revenue and EBITDA forecasts on the company. R.W. Baird raised its price target on Alltel to $72 from $69 and reiterated its outperform rating on the company following Alltel’s earnings news. In addition, the firm raised EPS estimates on the company to $2.42 from $2.29 for 2006 and to $2.84 from $2.67 for 2007.
- RBC Capital markets lowered its EPS estimates on Verizon Communications for 2006 from $2.78 to $2.68 and for 2007 from $3.08 to $3.01. The decreases primarily reflect a higher effective tax rate partially offset by higher wireless EBITDA assumptions, said RBC. R.W. Baird also lowered estimates on the company for 2006 to $2.54 from $2.56 and for 2007 to $2.66 from $2.68.
- Morgan Stanley initiated coverage on Leap Wireless International Inc. with an overweight rating and a $54 price target, saying the company is poised to increase penetration in existing markets and geographically expand to replicate its successes elsewhere. Standard & Poor’s Ratings Services affirmed its B- corporate credit rating on Leap and removed the company from CreditWatch with negative implications. The outlook on the company is stable, said S&P.
Handset and infrastructure vendors
- CIBC World Markets raised its second-quarter revenue and EPS estimates on Qualcomm Inc. to $1.89 billion and 40 cents after the company raised its Q2 guidance. RBC Capital Markets raised its estimates on the company on the new guidance. For 2006, it expects EPS of $1.61 rather than $1.57, and for 2007 it expects EPS of $1.92 rather than $1.88.
Other
- R.W. Baird downgraded Plantronics Inc. to neutral from outperform due in part to pricing pressure in Bluetooth products. Baird also lowered its price target on the company to $31 and reduced its 2007 EPS estimate to $1.76 from $1.96.
- First Albany Capital upgraded Powerwave Technologies to buy from neutral on a stronger-than-expected outlook and said first-quarter weakness appears to be a one-quarter anomaly. First Albany raised revenue estimates on the company for 2006 to $1.01 billion from $987.8 million and its EPS estimate changes to 60 cents from 59 cents. CIBC World Markets raised its estimates on Powerwave to $1 billion and 61 cents per share from $947.5 million and 56 cents per share on the expectation the company will complete its REMEC integration on schedule and see a bounceback in sales to Cingular. Piper Jaffray lowered its estimates on Powerwave Technologies after the company reported first-quarter revenue results in-line with guidance but lower-than-expected EPS results. The firm said it believes lower sales to Cingular were the primary reason Powerwave missed its initial sales expectations. The new estimates for 2006 are EPS of 61 cents on revenues of $1 billion from EPS of 65 cents on revenues of $1 billion. The company’s 2007 EPS estimate drops to 88 cents from 90 cents. R.W. Baird also lowered estimates on the company for 2006 to 62 cents from 74 cents and for 2007 to 72 cents from 85 cents. Baird also lowered its price target on the company to $15 from $17.
- Prudential Equity Group raised its estimates and price target on Harris Corp. although it said it remains cautious on its long-term RF communications outlook. The firm raised its price target on Harris to $43 from $38 and raised its 2006 EPS estimates to $1.69 from $1.64 and its 2007 EPS estimates to $2.75 from $2.25. Harris Nesbitt also upped its price target and estimates on the company. Its new price target is $51. For 2006, its new EPS estimates are $2.18, up from $2.15 and for 2007 its estimate increases to $2.55 from $2.52.
- Standard & Poor’s Ratings Services withdrew its ratings for wireless tower operator SBA Communications Corp., including its ‘B+’ corporate credit rating. At the same time, it withdrew the ratings on AAT Communications Corp., including the ‘BB-‘ corporate credit rating. “These actions follow the completion of the acquisition of AAT by SBA, and the concurrent completion of a debt tender for $424 million of SBA’s public debt and repayment of AAT’s $285 million of first- and second-lien bank debt,” said Standard & Poor’s credit analyst Catherine Cosentino.
- RBC Capital Markets upgraded Comverse Technology Inc. to outperform from sector perform saying it believes the company’s shares trade below fair value given continued strong business fundamentals. RBC said the company is working to resolve its option grant review issue, which still remains a risk.
- RBC Capital Markets downgraded Openwave Systems to underperform from sector perform and lowered its price target on the company to $18 from $24 despite quarterly results that beat estimates. RBC noted a variety of challenges, including declining maintenance and deferred revenues and potential difficulty achieving fourth-quarter targets. Piper Jaffray raised its estimates on Openwave for 2006 to pro forma EPS of 90 cents, up from 87 cents. 2007 estimates remain unchanged. R.W. Baird raised its 2006 EPS estimates on Openwave to 78 cents from 76 cents.
- R.W. Baird lowered its 2006 revenue and EPS estimates on PCTel Inc. to $88.8 million and 22 cents from $93.4 million and 28 cents after the company offered guidance that fell below expectations.
- R.W. Baird raised its 2006 EPS estimates on Syniverse Holdings Inc. to 85 cents from 83 cents but lowered its 2007 EPS estimate on the company to 99 cents from $1.01. Syniverse reported in-line first-quarter results but offered second-quarter guidance below expectations, said Baird.
- R.W. Baird downgraded Andrew Corp. from outperform to neutral and lowered its price target to $12 after the company’s second quarter report. First Albany Capital lowered its price target and adjusted its estimates on Andrew after the company reported revenues below expectations. The company’s new price target is $14.25, down from $16. For the third quarter, First Albany dropped its revenue and EPS estimates to $519.9 million and 9 cents per share from $525.6 million and 13 cents per share. For 2006, revenue estimates drop to $2.071 million from $2.099 million and EPS drops to 38 cents from 49 cents. Harris Nesbitt lowered its price target on the company from $16 to $13 on its earnings news. It also lowered 2006 EPS estimates to 38 cents from 55 cents and 2007 estimates to 65 cents from 80 cents. Credit Suisse First Boston lowered its price target on the company to $13 from $14 and lowered its estimates for 2006 to 42 cents from 57 cents.
- First Albany Capital slightly adjusted its estimates on Symmetricom Inc. for 2006 to reflect higher operating expenses. New revenue and EPS estimates for the year are $186.6 million and 31 cents from $186.1 million and 32 cents. RBC Capital Markets also adjusted its estimates on Symmetricom, lowering its 2006 EPS estimate to 30 cents from 34 cents but raising its 2007 EPS estimate to 46 cents from 45 cents. The lowered 2006 EPS estimate reflects lower gross margins and higher operating expenses, said the firm.
- Lehman Brothers raised its price target on Crown Castle International to $38 from $35 after the company reported strong first-quarter results. Lehman also raised its price target on American Tower Corp. to $40 from $35, saying its first quarter was very strong.
- First Albany Capital raised its price target on InterDigital Communications Corp. from $32 to $35 and reiterated its strong buy rating on the company after it announced a settlement with Nokia Corp. in a patent dispute between the two companies.
