Goldman See Solidity In Ingram Micro's 2011

Goldman Sachs has published a research report on Ingram Micro IM after hearing from CFO Bill Humes and Ria Carlson in Communications. In the report, Goldman writes "Ingram continues to see solid demand in the seasonally strong December quarter, where we have modeled for 13% qoq and 8.6% yoy growth. The pricing environment is characterized as normal (in line with our discussions with other industry participants), which combined with seasonal strength in IML (Ingram Micro Logistics) should drive a robust uptick in gross margin. Specifically, we see upside to the Street estimate of 16 bp sequential expansion to 5.52% gross margin in Q4 and our estimate of 5.55%. We stress that every 10 bp of GM upside in Q4 adds around $0.03 in EPS, representing 5% upside to our estimate. Equally important, we think improved performance on gross margin would help drive multiple expansion in the stock from current depressed levels. In addition, we see continued operating leverage heading into 2011, as management remains committed to keeping opex growth at half the rate of sales growth." Goldman maintains its Buy rating and $24 price target. Ingram Micro closed Friday at $18.60.