Stock Recommendations Fridays October 24 2008

From Standard & Poor's Equity Research. Western Digital Corp. Needham upgrades to strong buy from buy Western Digital (WDC) posted fiscal first quarter results. Needham analyst Richard Kugele says the company's $2.1 billion in revenue and 93 cents non-GAAP EPS compare to his $2.08 billion and 84 cents estimates. He says Western Digital conservatively forecasted muted demand; he takes it further and assumes no material improvement through fiscal 2009 (June), with an even weaker fiscal 2010. Kugele says he's now comfortable with his estimates for first time in six months; nevertheless, Western Digital was trading (pre-open Oct. 24) at book value, $1 above tangible book, and materially below historical trough valuations of 0.5x sales, at a whopping 4.2x even his lowered $3.10 (from $3.29) fiscal 2009 EPS estimate. He has a $22 12-month price target on the stock.

Netgear, Inc. Wedbush Morgan cuts target Wedbush Morgan analyst Rohit Chopra says Netgear Netgear (NTGR) posted mixed third quarter results and issued lower-than-expected guidance as economy takes its toll on business. He notes the company's 19 cents third quarter EPS missed his 24 cents estimate, due to a revenue shortfall, forex losses from a stronger U.S. dollar, and higher taxes. Chopra says weak retail and service provider channels caused the revenue shortfall. He cut his 2008 estimates to $1.18 EPS on $739.2 million in revenue from $1.41 and $770.4 million, respectively. Chopra sees some support for the stock coming from a 6 million-share buyback. He kept his hold rating on the stock, but lowered his $13 price target to $12, based on P/E analysis.

Juniper Networks, Inc. Stifel cuts target Stifel analyst Sanjiv Wadhwani says Juniper Networks (JNPR) posted solid third quarter results but gave cautious fourth quarter guidance due to the macro environment. He notes that Juniper's $947 million in revenue and 32 cents non-GAAP EPS beat his $930 million and 29 cents estimates. Wadhwani says Juniper management is emphatic that they haven't seen slowdown in business but rather the overall macro environment, and its desire to get the right cost structure for the company in case customers slow purchases was a factor that led to its lower guidance. Wadhwani says fourth quarter revenues are expected at $921-$971 million; the low end assumes a material slowdown in the company's business. EPS is seen at 30-33 cents. The analyst cut his $25 price target to $23, but kept his buy rating on the shares.