A Wall Street analyst on Tuesday upped his estimates for Santa Ana’s Ingram Micro Inc. on better than anticipated fourth-quarter results, stronger demand and improving corporate spending.
Ingram Micro, the largest distributor of technology products, software and consumer electronics, is set to report results next week.
Raymond James & Associates Inc. analyst Brian Alexander said in a research note he expects the company “to deliver an encore performance of its third-quarter results, with both revenue and earnings per share beating Street expectations.”
Alexander is looking for Ingram to report profits of $87 million, up from a previous estimate of $82 million in profits and ahead of analysts’ average estimate of $85 million in profits.
He upped his sales outlook to $8.5 billion for the quarter, up from a previous outlook of $8.35 million and ahead of an analysts’ average estimate of $8.32 billion in sales.
“We expect revenue upside to be driven predominantly by continued improvement in the North America region,” Alexander said. “We believe the easing of constrained credit and rebounding corporate profits have driven further improvement in IT demand.”
Alexander also increased his price target on the stock to $22 per share, up from $20 per share. Ingram Micro was trading at around $17 per share on Tuesday.
As a distributor of other companies’ goods, Ingram sees razor-thin margins. It nets pennies on the dollar.
The company got hit with a double-whammy during the downturn as companies and consumers slowed their spending on computers, software and other tech gadgets.
“Ingram Micro should see better earnings growth over the coming year as results have been more severely impacted by the recession compared to its major competitors,” he said. “We continue to recommend shares … given the companies industry-leading position, strong balance sheet and focus on improving return on invested capital.”
Ingram Micro’s shares closed up about 1.5% Tuesday on a recent market value of $2.8 billion.
