BMO Nesbitt Burns Inc. analyst Keith Bachman is warning investors to temper their enthusiasm for Hewlett-Packard Co. ahead of its fiscal third-quarter results on Thursday.
Rival computer maker Dell Inc. reported disappointing earnings for the same quarter, which ends in July, on Tuesday night. Mr. Bachman expects the Street won’t see much to celebrate in HP’s earnings, either, and downgraded the stock to “market perform” from “outperform.”
“We think the upcoming July-quarter earnings announcement will once again cause top-line estimates to move lower,” Forbes.com quoted him as saying in a research note. “We think PC results will come in below forecast embedded in HP’s guidance. Moreover, we do not think HP can achieve current estimates for HP’s October quarter.
“Hence, we think HP will modestly miss July top-line estimates, and more meaningfully miss current top-line estimates for HP’s October quarter. We think HP will be able to achieve approximately $5 in fiscal year 2011 non-GAAP EPS, helped by share buybacks, though weak revenue growth will keep the stock in check, in our view.”
Mr. Bachman cut his earnings forecasts for HP through 2012, noting lower growth expectations for PCs, printers and services, according to Forbes. He also believes that a spinoff of the PC division is unlikely in the near or medium term, given a lack of interested buyers.
Downside: Mr. Bachman cut his price target by $7 to $36.
Premier Gold Mines Ltd. has closed its acquisition of Goldstone Resources Inc., consolidating its ownership of the Hardrock project in Ontario. “The cleaner ownership structure at Hardrock plus its suite of properties makes Premier itself a more attractive takeover target,” commented Rob Chang, analyst with Versant Partners.
Upside: Mr. Chang, who rates the stock as a “buy (speculative)”, raised his price target to $11.55 from $10.15.
Pan American Silver Corp. is trading more than $12 (U.S.) below its 52-week high reached in April, prompting an upgrade to “buy” from Canaccord Genuity analyst Steven Butler. While earnings and production were lower than expected in the second quarter, he likes the stock for its “superior production growth” given new projects in the pipeline.
Upside: Mr. Butler maintained a price target of $41.50.
Grande Cache Coal Corp. reported fiscal first-quarter earnings that were well below Street expectations as costs shot up. Canaccord Genuity analyst Gary Lampard sees diluted earnings per share improving significantly in the second quarter, however, and maintained a “buy” rating.
Upside: Mr. Lampard cut his price target by 50 cents to $11.25.
Glacier Media Inc. reported a “solid” second quarter, with earnings before interest, taxes, depreciation and amortization growing 6.9 per cent. The company recently initiated a dividend of 6 cents per share, and Canaccord Genuity analyst Aravinda Galappatthige expects it to grow, given declining debt levels and rising free cash flow.
Upside: Canaccord maintained a “buy” rating and $3.20 price target; Raymond James Ltd. trimmed its price target by 25 cents to $2.75.
Imperial Metals Corp. stock “has considerable upside, and should be bought at these levels,” argued CIBC World Markets Inc. analyst Ian Parkinson. Its second-quarter earnings per share came in well below Street expectations, but he believes that the company should be bought for growth potential, as copper-equivalent production is forecast to rise 19 per cent over the next five years when compounded annually.
Upside: Mr. Parkinson maintained a “sector outperformer” rating and trimmed his price target by $1 to $35.