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04/24/15 04:22:45 PM
WORD ON THE STREET

The Coca-Cola Company, Microsoft Corporation, KLA-Tencor Corporation

The Coca-Cola Company(KO) : In a new report, Citi Research explained its key takeaways from the 2015 Beverage Forum Conference in Chicago. According to the firm's analysts, The Coca-Cola Co(NYSE: KO) has positioned itself well for the short-term, but they believe the long-term industry-wide changes in the non-alcoholic beverage business could pose a challenge for the company. Product innovation was a key topic of discussion at the conference. In the alcoholic beverage space, innovation in craft beer, flavored bourbon and flavored malt beverages has "materially depressed" sales of more traditional lagers and spirits. Analysts believe that innovation will be a key to success in the non-alcoholic beverage space as well in upcoming years. While Coca-Cola and Pepsico, Inc.(NYSE: PEP) have made strides to expand product offerings in recent years, analysts see increasing demand for "specialized" beverages. Related Link: Why Susquehanna Thinks Sodastream Is Worth $24/Share The fastest-growing beverage demographic is millennials, and beverage companies are scrambling to keep up with the group's unique taste. Analysts explain that millennials prefer healthier beverages, customized flavors and packaging and a constant stream of new product offerings. Analysts attended a talk by Senior Vice President of Coca-Cola's Sparkling Brands Katie Bayne. Bayne explained that the majority of Coca-Cola's marketing efforts in 2015 will be focused on the core Coke brand. Bayne added that Monster Beverage Corp(NASDAQ: MNST) and Keurig Green Mountain Inc(NASDAQ: GMCR) provide "different formats which offer a different pacing of caffeine," allowing at-home consumers more freedom to customize their caffeine intake. Analysts see The WhiteWave Foods Company(NYSE: WWAV) as one potential acquisition target for a larger beverage name and note that they were impressed by Odwalla as well. They also predict that Coca-Cola, Pepsi and Dr Pepper Snapple Goup Inc (NYSE: DPS) will all likely be looking to make bolt-on acquisitions of start-up brands in upcoming years. View More Analyst Ratings for KOView the Latest Analyst Ratings Write to editorial@benzinga.com with any questions about this content. Subscribe to Benzinga PRO: http://pro.benzinga.com 2015 Benzinga Newswires. Benzinga does not provide investment advice. All rights reserved.



Microsoft Corporation(MSFT) : Microsoft Corporation (NASDAQ: MSFT) on Thursday reported third quarter results that jolted shares higher by nearly 10 percent by Friday afternoon. Here is a summary of what some of Wall Street's top analysts have to say about the company's results. FBR: Nadella 'Putting The Train Back On Track' Daniel Ives of FBR & Co. commented in a note that Microsoft's better than expected results, coupled with a fourth quarter guidance that was "better than feared" indicate the company is back on the right track after a "head-scratching" performance last quarter. Ives noted that the commercial segment remains Microsoft's "bread and butter." At the same time, the company saw "good performance" in cloud (Azure/Office 365) and will continue to represent a key differentiating factor over the coming years. The company also showed "solid" expense controls and restructuring efforts, turning itself in to a "leaner and meaner" technology giant. Shares remain Outperform rated with an unchanged $53 price target. RBC: 'Now Back To Cloud Transformation' Ross MacMillan of RBC Capital commented that Microsoft's results were "better" across revenue, earnings per share and cash flow while billing and bookings (adjusted for foreign exchange) showed "healthy" mid to high single digit growth while operating expense controls continued to "positively surprise." MacMillan said that the transitional shift to the cloud will "continue to play out" and will ultimately drive higher lifetime value per customer and create new markets. Naturally, the shift will be "gradual" and a long-term model supports a higher valuation, but there exists some near-term risks such as declining Windows revenue. Shares remain Outperform rated with a price target raised to $50 from a previous $47. Citigroup: Not Impressed Walter Pritchard of Citigroup commented that Microsoft's operating expenditure was "significantly' lower than he modeled and drove the majority of the $0.10 in earnings per share upside. However, the analyst added that the company's guidance suggests its earnings power will shrink again into a seasonally strong fourth quarter. Prtichard said that a $0.56 per share guidance at mid-point is below the Street's estimate of $0.62 with drivers similar to recent history (high-margin revenue source weakness), even when factoring currency woes. The analyst did note that operating expenditure will likely hold tight in the fourth quarter making the guidance conservative. However, "suppressed" S&M (Speed + Mobility) will likely reverse "to some degree" into fiscal 2016 with major Windows and Office launches. Moreover, the company didn't comment on fiscal 2016 operating expenditures and consensus estimates may be elevated for the year, especially if operating expenses expand. Shares remain Sell rated with a price target raised to $37 from a previous $36. BMO: Another Mixed Quarter Joel Fishbein, Jr. of BMO Capital Markets commented that Microsoft's were "mixed" as the XP "end of life hangover" and Office 365 continued to "compound a choppy" PC environment and currency headwinds. The analyst said that Microsoft's Phone revenues and profitability "disappointed" while its overall share targets and future earnings prospects remain in question. Growth drivers, including Server, Office 365 transition, Azure and Cloud are "intact" but not large enough to offset headwinds in other divisions. Fishbein did state that Microsoft will face easy compares when it launches Windows 10, but sustained operating expenditure reductions may be "hard pressed" and without top-line improvements, the company's earnings power will continue to be "hampered." Shares remain Market Perform rated with an unchanged $45 price target. View More Analyst Ratings for MSFTView the Latest Analyst Ratings Write to editorial@benzinga.com with any questions about this content. Subscribe to Benzinga PRO: http://pro.benzinga.com 2015 Benzinga Newswires. Benzinga does not provide investment advice. All rights reserved.



KLA-Tencor Corporation(KLAC) : Shares of KLA-Tencor Corp(NASDAQ: KLAC) were down about 2 percent on Friday after the company reported better than predicted fiscal third quarter financial results, but provided guidance below expectations. Citi analysts Atif Malik and Amanda Scarnati downgraded the stock from Buy to Neutral on "Higher Foundry Inspection Equipment Re-Use." The analysts also trimmed their price target from $80 to $66, and cut 2015 and 2016 estimates to reflect the higher foundry equipment re-use. They now expect EPS of $2.07 (versus a previous $2.28) for 2015, EPS of $4.20 (down from $5.10) for 2016, and EPS of $4.59 (down from $5.89) for 2017. While the firm remains constructive on the semiconductor equipment group, "with C15 WFE to grow +11% Y/Y led by Samsung (+12%Y/Y)," they model KLA-Tencor's top-line growth "below total WFE market or +4% Y/Y." Citi still expects "deposition/etch equipment makers like LRCX/AMAT to outgrow the market." According to the analysts, fundamentally, when the above is coupled lower memory share, the company's foundry opportunity is "getting hurt from elevated inspection equipment re-use across multiple or 28nm/20nm/14nm technologies" (see Figure 2). The higher foundry equipment re-use augments volatility in KLA-Tencor's outlook, the report explains. The analysts say they could become constructive if they say "pull-in of 10nm activity and/or lower inspection re-use at Intel and TSM." View More Analyst Ratings for KLACView the Latest Analyst Ratings Write to editorial@benzinga.com with any questions about this content. Subscribe to Benzinga PRO: http://pro.benzinga.com 2015 Benzinga Newswires. Benzinga does not provide investment advice. All rights reserved.



 

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