Ingram Micro a Hold on Headwinds - Analyst Blog
On September 16,
Ingram Micro (
IM) reduced its outlook for the third quarter, setting its guidance at sales of $8.3-$8.6 billion and EPS of $0.18-$0.23. On October 23, Ingram reported third quarter sales of $8.2 billion and EPS of $0.29. Sales trends remain weak because of slowing global economic growth, but the company's strong cost controls helped it beat its EPS guidance.
Going forward, we expect the company to focus on maintaining its gross profit margins and cutting costs. This strategy will lead to a drop-off in its sales growth in the near term, but it should position the company to benefit when macro headwinds finally subside.
We rate the stock a Hold with target price of $14. Ingram Micro shares trade at 9.7x our 2008 EPS estimate and 8.8x our 2009 EPS estimate. We think shares of IM will track the performance of the S&P 500 over the next six months. Our target price is about 10x our 2009 EPS estimate.
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