Kaufman Raises Price Target on Tekelec (TKLC) Following Acquisition Announcement

November 8, 2011 11:54 AM EST
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Price: $11.00 --0%

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    1 Buy, 4 Hold, 2 Sell

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Kaufman Bros. is maintaining its Hold rating on shares of Tekelec (NASDAQ: TKLC) and is raising its price target from $9 to $11 following the announcement to be taken over privately.

The company also released its Q3 results ahead of expectations and inline with its previous outlook. Earnings for the quarter totaled $0.19 per share on a non-GAAP basis on $106.2 million in sales. Orders for the quarter were down 16 percent year over year due to a decline in both the Global Signaling and the Broadband Network Solutions segments.

Kaufman is raising its FY11 and FY12 EPS estimates from $0.31 and $0.44 to $0.43 and $0.45. Revenue estimates for the two years were also raised from $394 million and $398 million to $407 million and $411 million.

The definitive agreement to acquire Tekelec for $780 million or $11 per share is expected to close in Q1. An analyst at Kaufman comments, "We view the deal price, a 11 percent premium above Friday's close, as not unreasonable even with the company's bifurcated revenue prospects, near-term carrier capex uncertainty, and the DSR product's high customer concentration risk despite its proprietary characteristics."

For an analyst ratings summary and ratings history on Tekelec click here. For more ratings news on Tekelec click here.

Shares of Tekelec closed at $11.29 yesterday.

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