Revenues came in at $444.9 million, slightly below our estimate of $446 million. GAAP EPS of $0.30 came in a penny ahead of our $0.29 estimate. Excluding stock compensation, pro-forma EPS for the quarter was $0.35. GAAP Gross margin of 61.8% was below both on a sequential basis and the company s guidance of 62%-63%. Excluding two one-time charges, pro-forma gross margin came in at 62.8%.

'Operating margin also fell slightly to 21.2% compared to 21.9% in the prior quarter. Forward guidance of 2%-6% revenue growth is significant because if the company performs within this guidance range Q3 will be the first sequential growth quarter in six quarters. We had earlier adjusted our Q3 and FY2008 estimate accordingly. We continue to rate Xilinx a Buy ahead of the third quarter results (expected on January 17, 2008).

'However, given the declining quarter-over-quarter revenue growth, we would like to see better performance in the December quarter. Accordingly, we have adjusted our target price to $31 to reflect the current weakness, along with greater market and regulatory uncertainty. This is derived by applying a target P/E multiple of 25.0x to our fiscal year 2008 EPS estimate. We consider our choice of target multiple to be conservative and underscores the attractiveness of the company's valuation.' 

Hold Millennium Pharma

An update has just come out today on Millennium Pharmaceuticals, Inc. (MLNM), in which senior pharmaceutical industry analyst Grant Zeng, CFA is restating his Hold rating on the company.  We excerpted the following details:

'Millennium Pharmaceuticals, Inc. is a drug discovery and development company. Millennium relies heavily on Velcade, the company's key product on the market, for both short-term and long-term growth. Although Velcade's growth has slowed down since 2006 due to stiff competition from Celgene's (CELG) Revlimid and Thalidomide, the recent encouraging phase III data for first line treatment of MM could expand Velcade label and boost top-line growth in 2008 and beyond.

'The company also has a robust, interesting and early-stage pipeline which will contribute to revenue growth after 2009. We estimate 2009 non-GAAP EPS of $0.51 excluding share-based compensations. Currently, the biotech industry is trading at 38x P/E. We use this industry average P/E, multiplied by our 2009 estimated non-GAAP EPS of $0.51, discounted at 25% for one year, to arrive at our target price of $15.50.

'We believe investors are discounting Millennium due to the slowing growth of Integrilin and the lack of meaningful reacceleration of Velcade sales. Investors are probably concerned that Velcade sales growth may be limited now that Celgene Corporation has approval for Revlimid in MDS (in the U.S. only) and MM (in both U.S. and EU). We maintain our Hold rating on the shares of Millennium based on the encouraging phase III data for the first line treatment of MM. Our new price target is $15.50.'

USB a Hold Pre-Earnings

In a report on U.S. Bancorp (USB), Zacks finance sector analyst Eric Rothmann has lowered the 2008 expected revenue and EPS but restated his Hold rating on the company.  We excerpted the following details:

'Before market open on January 15, 2008, the company intends to release its 4Q07 results, with a conference call scheduled for noon the same day. Even though USB has strengthened its non-interest income, spread income remains weak (based on slow loan growth and continued margin compression). The restated core earning results for 3Q07 were two cents higher than our original expectations for the quarter, despite the current turmoil in sub-prime lending, liquidity and credit markets.

'Current pricing looks somewhat expensive on a P/E-to-growth (PEG) basis, using the consensus forward estimate and the consensus long-term growth rate. USB s PEG ratio on that basis is 1.38, a 19% premium to the 1.16 median for the peer group (versus a 6% premium previously). On a price-to-book basis, the shares are much less attractive considering the 111% premium above the median level, compared to company's ROE with a 95% above the median level. Top-line growth has been elusive, and even though expenses have grown USB remains focused on expense containment. In addition, price-to-book is well above the top of the peer range, which ought to serve as a constraining factor as well.

'Considering the ongoing U.S. housing market concerns, we have fine-tuned our 2007 earnings expectation, but substantially reduced our 2008 earnings expectation. For 2008, we have reduced our EPS target to $2.58 per share from $2.87 per share. The housing market concerns have curtailed top-line growth and may result in enhanced loan loss provisions over the next several quarters. Thus, we are substantially lowering our 2008E EPS, reducing our six-month price target to $31.50 per share from $34 per share, but maintaining our Hold rating at this time.'

Solid ROE for NVIDIA

Zacks senior software analyst Steve Biggs, CFA has continued to maintain his Buy recommendation to the shares of computer graphics company NVIDIA Corporation (NVDA).