10/20/2008 - Upgrade & Downgrade

Applied Materials (AMAT), Intel (INTC)

Goldman Sachs upgrades Applied Materials, downgrades Intel

Analyst James Covello raised his Semiconductor Capital Equipment coverage view to attractive from neutral as three rules he uses to upgrade cyclical stocks have been finally met:

1. Trough margins
2. Management capitulation
3. Signs of life on the horizon that fundamentals are poised to improve.

He raised Applied Materials (AMAT) to buy from sell, and added the stock to Goldman's Conviction Buy List. Covello notes that with the shares down 32% since his downgrade on January 3, 2007, vs. the S&P 500's decline of 33%, AMAT's valuation is now too low to ignore as the stock trading at around $12 or 15 times normalized EPS vs. 21 times in early 2008. Hew raised his $14.50 price target to $15. He cut his rating on Intel (INTC) to neutral from buy.

Research in Motion (RIMM)

Pacific Crest sees risk to Q3 results, keeps sector perform

Analyst James Faucette says his checks indicate BlackBerry handset sell-through through the middle of October is slightly disappointing. Faucette believes early sell-through of BlackBerry Flip at T-Mobile is particularly disappointing. The analyst notes execution problems plaguing Curve in Canada and Bold sales in the UK. He believes the company's (RIMM) third quarter guidance is based on stellar November sales, and is increasingly reliant upon aggressive and successful ramps of BlackBerry Storm and BlackBerry Bold in the U.S.

Faucette maintains his 96 cents third quarter EPS estimate and his $3.63 fiscal 2009 (Feb.) forecast. He maintains his sector perform rating on the shares.

Anadarko Petroleum

FBR Capital upgrades to outperform from market perform

Analyst Rehan Rashid says large-cap exploration and production firms are relative beneficiaries in this market environment with stronger balance sheets, access to capital, deep asset inventories to diversify risk, and liquids exposure. He says Anadarko (APC) upgrade reflects valuation, pending exploratory catalyst. In addition, he notes Anadarko management execution continues to de-lever the company's balance sheet, and the company has about 95% of its Rockies basis hedged for next year. Rashid believes Anadarko is trading at a steep discount to his revised net asset value (NAV) of $56 per share. He says his $50 price target is a slight discount to proved NAV.


Related Posts :

1. 10/20/2008 - Long & Short Ideas for Tuesday
2. 10/20/2008 - As Oil heading toward $50, Buy DUG

Sources :

Business Week: Analyst Actions: Intel, AMAT, RIMM, Anadarko, October 20, 2008, 12:32PM EST

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