Friday, May 08, 2009

Early morning tidbits: CECO,SONC

Couple of ratings changes that stand out early on:

- UBS is upgrading Career Education (NASDAQ:CECO) to Buy from Neutral while raising their tgt to $30 from $26.

Firm notes the slight revenue miss vs consensus was likely due to lower revenue per student as Culinary programs were extended to 21 months from 15. This makes them less reliant on expensive private loans. Enrollment rose 10.5% for Q2, above 6.9% in Q1, beat firm's estimate of 6.4% on outperformance in all divisions, and consensus of 5.9%.

UBS is maintaining their 2009E EPS at $1.15, despite the Q1 miss, and raising 2010E and 2011E EPS to $1.65 and $2.00, above the consensus of $1.57 and $1.69.

Notablecalls: The stock got hit yesterday following results and UBS raising their rating/tgt/estimates is certainly a surprise here. This one will squeeze higher.

- Merrill Lynch/BAM is out downgrading Sonic (NASDAQ:SONC) to Underperform from Neutral while lowering their tgt to $7.50 from $9.50 after the nation's largest chain of drive-in restaurants told investors ystem-wide same-store sales in March and April deteriorated slightly versus levels experienced in the first two quarters of fiscal 2009, reflecting an ongoing weak consumer environment (link:)

According to Merrill, softer sales lead to significant changes in EPS estimates from $0.69 for FY 2009 to $0.58 and from $0.86 to $0.67 for FY 2010. They are assuming that negative same store sales trends continue into FY 2010. For the second consecutive year, Sonic is negatively pre-announcing on the eve of its investor meeting. Same store sales in the 3Q (May) are running slightly below the down 3.6% system wide same store sales recorded in the first half, including partner same store sales down modestly worse than the minus 6.3% rate for the first half. These are disappointing sales levels versus easier sales comparisons. Sonic is making significant progress on its refranchising plan.

Notablecalls: Morgan Stanley beat Merrill to the punch with their April 20 downgrade but I think SONC will still get hit on the news/call.


IV said...

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thank you

Mr. SIngh said...

PSA bullshit downgrade ANALYSIST Suck