Increased pressure on both the cable and wireless fronts has resulted in missed earnings expectations and lowered estimates for Rogers Communications Inc. , notes Desjardins Securities Inc. analyst Maher Yaghi.
On Tuesday, Rogers released first-quarter 2012 earnings that showed flat revenue and increased costs for its wireless network, while an increase in new wireless subscribers was cancelled out by an increased churn rate, or number of subscribers who cancel their services.
The company’s cable revenue of $825-million missed Mr. Yaghi’s expectations by $22-million, due partly to promotional offers that he believes will continue in an effort to compete with rival Bell.
“Basic subscriber losses accelerated in the quarter to 21,000, greater than our forecast of 5,000 losses; this marks the first tangible evidence that Bell’s rollout of IPTV is having an impact on Rogers,” says Mr. Yaghi. “While Rogers believes the rollout of NextBox 2.0 in the quarter should help mitigate higher value video subscriber losses, we believe that Rogers will face a tough competitive environment in the near to medium term on the video side despite this new technology offer as a result of Bell’s increased activity in the marketplace.”
Mr. Yaghi has lowered Rogers cable revenue estimates to $3.36-billion (from $3.43-billion) for 2012, while wireless network revenue estimates are now $6.68-billion (from $6.75-billion).
Downside: Mr. Yaghi is maintaining his “hold -- average risk” rating and $41.50 (Canadian) price target.
The world’s largest Caterpillar equipment dealer, Finning International Inc. , should continue to benefit from strong demand for mining equipment, says Desjardins analyst Benoit Poirier.
Caterpillar reported first-quarter 2012 revenue of $16-billion (U.S.), a 23 per cent year-over-year increase, and record earnings per share of $2.37. Its order backlog increased 3 per cent quarter-over-quarter and reached a new record level of $30-billion as mining orders continue to grow.
“Caterpillar’s results support our thesis that Finning will continue to benefit from strong demand for mining products going forward,” says Mr. Poirier. “We forecast that Finning’s revenue will increase by 15 per cent and 13 per cent in 2012 and 2013, respectively.”
Upside: Mr. Poirier is maintaining his “buy -- average risk” rating and $34 (Canadian) price target.
Continued strong market share in the notebook segment and a promising new CEO won’t be enough to overcome Synaptics Inc.’s headwinds, according to National Securities Corp. Darice Liu.
Issues facing Synaptics include slower-than-seasonal PC demand, shifts in market share, new entrants to the market, and timing and volume hiccups in the adoption of capacitive touchscreen products, explains Ms. Liu. Overall, she regards Synaptics as a “high-maintenance” stock.
Upside: Ms. Liu is maintaining her “neutral” rating.
Consumer and military robot maker iRobot Corp. earns a gold star for its consumer segment performance, while government segment fortunes are less than stellar, says National Securities Corp. analyst Barbara Coffey.
Reported revenues of $97.8-million (U.S.) for the March quarter and earnings per share of 2 cents exceeded her expectations. “As expected the company exceeded on the home side and remains cautious on the military side,” she said.
Ms. Coffey has updated her model and is now expecting revenues of $481.3-million, up from $479.6-million for the full year.
Upside: She is maintaining her “buy” rating and price target of $31 (U.S.).
A recovery in demand in the met coal market should help ease investor concerns overTeck Resources Ltd. , but the market still has significant uncertainties, says CIBC World Markets Inc. analyst Alec Kodatsky.
Teck's adjusted earnings of 86 cents per share was slightly below consensus of 89 cents and Mr. Kodatsky's forecast of 90 cents, mainly due to higher-than-expected interest charges. "Overall, Teck delivered another solid operational quarter with strong coal and zinc/lead production, which helped offset a small shortfall in copper output," he said.
Upside: Mr. Kodatsky is maintaining his $62 (Canadian) price target "outperform" rating.