The following list includes ratings changes and financial information for wireless companies announced this week by investment-banking and financial-services firms.
Carriers
RBC Capital Markets tweaked its 2006 forecasts for Sprint Nextel to account for its planned acquisition of Alamosa Holdings. The firm now estimates revenues of $44 billion and EBITDA of $14.3 billion, down from estimates of $44.3 billion and $14.33 billion. RBC raised its 2005 EPS estimates on the carrier, from 53 cents to 85 cents, reflecting pro forma adjustments to EPS for the first three quarters of the year. RBC rates the company at outperform with a $33 price target.
Handset and Infrastructure Vendors
Prudential Equity Group raised its fiscal first-quarter EPS estimate on Qualcomm Inc. to $1.50 from $1.49 after the company updated its guidance for the quarter, saying it expects higher EPS and revenues at the high end of guidance.
UBS raised its unit estimates for Nokia for 2006 and 2007, from 289 million to 316 million and from 304 million to 331 million respectively. 2006 and 2007 group revenue estimates increase to $43.5 billion and $47.5 billion. UBS increased Nokia’s price target to $21.10 from $18.76.
Standard & Poor’s raised its rating on Nortel Networks from sell to hold, saying it believes the company’s shares are worth holding for potential improvements in carriers spending.
UBS raised its estimates on Sony Ericsson Mobile Communications for 2006 to revenues of $9.7 billion and unit volumes of 57.1 million. The firm said it believes Sony Ericsson is well positioned to benefit from upgrade cycles in developed markets but is competitively disadvantaged in emerging markets. As a result, UBS also slightly increased its estimates on L.M. Ericsson for 2006 and 2007.
CIBC World Markets raised its 2006 handset shipment estimate to 920 million from 892 million and its 2007 estimate from 992 million from 956 million based on stronger-than-projected new subscribers in emerging markets and a robust replacement rate in mature markets. Consequently, CIBC raised its estimates on Motorola Inc., Qualcomm Inc. and Nokia Corp. and raised its price target on both Motorola and Qualcomm.
Piper Jaffray increased its estimates on Motorola Inc. to reflect strong sales of the company’s Razr model and its belief that the company’s Slvr, Pebl and CDMA Razr will show strong sell-in trends during the first quarter of next year. For 2006, Piper Jaffray raised its EPS estimates on the company from $1.20 to $1.23 and revenue estimates from $39.9 billion to $40.3 billion. Piper Jaffray rates Motorola at market perform with a $23 price target. UBS raised its 2006 and 2007 handset unit and EPS estimates on Motorola. For 2006, UBS expects Motorola’s EPS to come in at $1.31, up from $1.26 and for 2007 the firm predicts EPS of $1.52, up from $1.39. Unit estimates increase from 851 million to 881 million for next year, and from 903 million to 949 million for 2007. UBS also raised its price target on the company from $27 to $30.
Other
Prudential Equity Group raised its EPS estimates on Texas Instruments Inc. for 2005 from $1.45 to $1.46 and for 2006 from $1.90 to $1.95. The company narrowed guidance toward the upper end of its range and said it now expects 1-percent quarter-over-quarter growth, up from an expected decline.
Robert W. Baird downgraded Tekelec from outperform to neutral, saying it believes the company will lose its Cingular switching revenue next year due to Alcatel‘s Softswitch performance problems at the carrier. Baird also lowered 2005 EPS estimates on the company from 65 cents to 64 cents and 2006 estimates from 90 cents to 80 cents and lowered its price target to $15. Tekelec sells its T8000 Media Gateway to Alcatel, which sells a packaged Softswitch solution to Cingular.
Lehman Brothers initiated coverage on Sonus Networks with an underweight rating and a $3.60 price target.
RBC Capital Markets raised its price target on Comverse Technology Inc. to $26 on a solid outlook for the company. RBC said the company’s divisions are well positioned within high growth areas of the communications software space. Robert W. Baird increased its 2005 EPS estimate on Comverse, from 57 cents to 61 cents, noting the company’s solid third quarter and strong backlog.
Morgan Stanley increased its price target on American Tower Corp. from $27 to $30 and upped its price target on SBA Communications Inc. from $19 to $22 to reflect a favorable outlook for the tower industry. Both companies are rated overweight by Morgan Stanley.
First Albany Capital downgraded its rating on Axesstel Inc. from strong buy to neutral after the company warned fourth-quarter revenues may fall below guidance and that the company’s chief financial officer had resigned. The company also noted issues with new product introductions with some large customers, which will negatively affect revenues.
UBS lowered its earnings-per-share estimates on Avaya for fiscal 2006 and 2007 to 66 cents and 83 cents respectively, from 70 cents and 84 cents on a higher operating expense outlook. UBS rates Avaya at buy with a $14 price target.
Robert W. Baird adjusted its estimates on Openwave Systems after the company announced a secondary offering of 15.6 million shares, which is partly expected to fund its acquisition of Musiwave. RW Baird lowered its 2006 earnings-per-share forecast on the company to 82 cents from 92 cents, to account for higher share count offset by higher interest income, and maintained its outperform rating on the company.
Robert W. Baird raised its price target on OmniVision Technologies Inc. to $20 and upped its earnings-per-share estimates on the company after OmniVision delivered strong results. However, Baird questioned the sustainability of the company’s growth in the last quarter and said it believes the company missed the 1.3mp sensor transition in mobile phones. Baird rates OmniVision at neutral.
