Goldman Sachs reinstates coverage on Citi at sell, says buy Morgan Stanley
Goldman Sachs analyst William Tanona reinstated Citigroup (C) at sell and added the stock to Goldman's Americas Conviction Sell List with an $11 six-month price target. He believes it will be difficult for Citi to generate profitability over the next 12 months as additional write-downs, lower levels of capital markets activity, and further deterioration in credit quality trends will continue to weigh on its operating results and capital ratios. He notes Citi trades at 2.3x tangible book value (before the start of trading Oct. 21), well above the 1.5x peer group median, and Morgan Stanley's (MS) multiple of 0.7x. He reinitiated his buy Morgan Stanley/sell Citi pair trade to take advantage of the valuation discrepancies.
Coach Inc. (COH)
Lazard upgrades to buy from hold
Coach (COH) posted higher first-quarter results. Lazard analyst Todd Slater says, recognizing that trends are likely to decelerate against a weakening economic backdrop, he thinks Coach stock is oversold. Slater notes while he's cutting his fiscal 2009 (June) EPS estimate to $2.15 from $2.27, and his fiscal 2010 forecast to $2.15 from $2.46, he's upgrading Coach on his view that the stock is discounting numbers below his worst-case scenario of $1.80 in 2010, an estimate that assumes same-store sales down 12% and $800 million in buybacks over the next 24 months. He notes Coach's 44 cents first-quarter EPS was largely in line with Wall Street estimates and company guidance. He has a $26 price target on the shares.
Texas Instruments (TXN)
Needham cuts estimates, price target
Texas Instruments (TXN) posted lower third-quarter results. Needham analyst N. Quinn Bolton says TI's results missed estimates on lower wireless revenue and deteriorating gross margins; the company significantly reduced its fourth-quarter view on worsening macro headwinds, a less-than-seasonal Christmas holiday, and gross margin pressure. Bolton cut his 42 cents fourth quarter EPS estimate to 33 cents, his $1.79 2008 forecast to $1.69, his $1.70 2009 projection to $1.35; he also cut his $25.50 price target to $20. Despite the company's disappointing guidance, Bolton is positive on TI's plan to sell its low-margin, merchant baseband business and focus on its OMAP processor and custom baseband segments. Bolton kept his buy rating on the shares.
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- Business Week: Analyst Actions: Citi, Morgan Stanley, Coach, Texas Instruments, October 21, 2008, 2:23PM EST
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