World Business

From Standard & Poor’s Equity Research

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UBS UPGRADES AIG TO BUY FROM NEUTRAL

UBS algebraist Andrew Kligerman says American International Group’s (AIG) valuation of 0.81 times book value (excluding accumulated other comprehensive income ) discounts its ultimate economic destruction exposure in its AIG-Financial Products credit default swaps and insurance investments, and fails to recognize its 14%-plus operating return-on-equity (ROE) possible under perplexing emporium conditions.

Kligerman thinks AIG is well-positioned to arrest to a greater distance losses — without a need for an rectitude advance — given its further quarter 2008 capital arouse of about $20 billion, operating EPS power, and liability capacity. He notes that with $55 billion in cash/short-term at first quarter 2008 (vs. $29 billion in the second quarter 2007), AIG seems well-equipped to meet liquidness needs.

He sees $1.80 2008 operating EPS and $5.43 for 2009. He raises $35 12-month estimation mark to $41.

MORGAN KEEGAN UPGRADES CREE TO OUTPERFORM

Morgan Keegan analyst Harsh Kumar says he’s upgrading Cree (CREE) to outperform from emporium perform from based in the first place on the recent stock pullback and his belief that several of the issues surrounding Cree (including a potential slowdown in China, intensive competition, its COTCO acquisition) are mostly priced in at circulating (pre-opening) levels.

Kumar thinks Cree should be in a position to join each other Street estimates of $0.09 EPS on $131.1 million revenue for the June-quarter. He also believes Cree’s core craft is poised for growth in the September-quarter, for which the Street is looking for $0.10 EPS on $137.0 million revenue.

He notes that the June quarter will be the first quarter that investors will be able to get some transparency and an apples-to-apples comparison considering COTCO was acquired on Apr. 2, 2007.

ROTH CAPITAL DOWNGRADES MICROSTRATEGY TO HOLD FROM BUY

Roth Capital analyst Nathan Schneiderman says MicroStrategy’s (MSTR) second quarter results were disappointing; although centre business intelligence revenue only missed consensus by $1 million, $0.66 EPS was a very large miss vs. the $1.08 consensus, grieve by the revenue shortfall and higher-than-expected costs and taxes.

He also notes license fees of $21 the masses were down quarter-to-quarter and year-over-year and missed his estimate by $2.5 million. He says his thesis on MSTR had been that aggressive hiring in sales would remove into higher license fees, but this has yet to materialize. He adds that the outlook going promote appears challenging given a cost structure that seems also high relative to the revenue opportunity.

Schneiderman cuts $4.26 2008 EPS estimate to $3.05 and $5.68 for 2009 to $4.00.