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Tuesday, July 11, 2006

Calls of Note Part 3

- ThinkEquity notes Autodesk (NASDAQ:ADSK) shares have been weak recently, likely stemming from excessive concerns over the Architectural Billings Index (ABI), which is being used as a gauge of building activity and ultimately, a need for Autodesk products. Although ABI was down for the month of May, a deeper, more complete analysis suggests a rebound ahead, in firm's view. Additionally, given Autodesk's diversification, North America Architecture spending represents only an estimated 10% of revenues in CY2006. They believe that valuations are compelling, and understate benefits from a number of growth drivers, including strengthening reseller channel, improving competitiveness, healthy product cycle, and emerging region exposure.

Firm is maintaining their $51 price target, based on 35x CY2006 EPS estimate of $1.46.

Notablecalls: I think ADSK is due for the mandatory dead cat bounce.

- Bear Stearns lowers their EPS estimates for Applebee's (NASDAQ:APPB) for 2006 and 2007 to $1.21 and $1.40, respectively. Firm notes that when they previously lowered 2006 EPS in late May, their estimate seemed too close to original guidance of $1.26-$1.30 to account for the softer sales pattern evident for Applebee's and throughout casual dining in recent months. They were being too optimistic in their full year expense estimates.

Firm's new 2006 EPS estimate is premised on flat same store sales for the balance of the year. APPB is scheduled to release new guidance when 2Q earnings are released on July 26th. They expect the company to take a fairly conservative posture given uncertainty about sales.

Maintains Peer Perform rating on APPB shares.

Notablecalls: APPB's chart looks like it may go lower from here. The new EPS ests are a tad below consensus.

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