By TheFlyOnTheWall
November 4, 2008 11:43 am
Analyst upgrades:
- S&P maintains strong buy opinion on class B shares of Viacom (VIAB):
Before $0.07 tax benefit and on 7% less shares, third quarter EPS of $0.55, vs. $0.65, misses our estimate by $0.05 but was in line with Street. As pre-announced, U.S. ads fell 3%, with likely more weakness ahead. third quarter showed tough film comps vs. '07's Transformers, partly offset by strong international ads, worldwide affiliate fees, Rock Band games (over 7M units to date). We see strong Q4 DVDs (Iron Man, Indiana Jones 4, Panda). Chairman Redstone again said he plans no more sale of shares, amid talks between lender and Redstone's National Amusements. We keep PEG-based target price of $25. /T. Amobi - CPA, CFA - S&P reiterates buy opinion on shares Yahoo (YHOO):
In an unconfirmed report, the WSJ indicates that YHOO and Google (GOOG; 352.21, Strong Buy) sent the Justice Dept. a revised search-advertising agreement. The new pact would add a 25% limit on the percentage of YHOO's search revenues generated from the deal, reduce its length to two from 10 years, and enable GOOG advertisers to choose not have their ads displayed on YHOO properties. We think these alterations increase the chance of passing DoJ muster, but also reduce the possible benefits. Without a DoJ okay, we think YHOO would look to partner with Microsoft (MSFT; 23.11). -S. Kessler - Philip Morris (PM) was upgraded to Outperform from Neutral at Credit Suisse.
- Friedman Billings upgraded shares of Principal Financial (PFG) to Market Perform from Underperform as they believe the company's capital buffer could keep outrunning credit losses.
- Friedman Billings also upgraded Office Max (OMX) to Outperform from Market Perform. The firm believes the risk of recourse to Office Max from the Timber Notes formerly backed by Lehman is low and that any litigation by noteholders will have a low level of success.
- Citigroup upgraded CF Industries (CF) to Buy from Hold on valuation following the recent weakness but lowered their target to $113 from $128.
- Analog Devices (ADI) was upgraded to Buy from Neutral at Merrill Lynch.
- Granite Construction (GVA) was upgraded to Neutral from Sell at Goldman.
Analyst downgrades:
- S&P downgrades shares of PPL Corp to hold from buy (PPL):
PPL shares down 11% this morning on sharply reduced outlook. The company reports third quarter operating EPS of $0.45 vs. $0.72, $0.16 below our estimate, hurt by a drop in wholesale energy margins and outages at two coal plants. We are reducing our 2008 EPS estimate $0.25 to $2.05, and based on expected rise in operation and financing costs, 2009's by $0.50 to $1.75. We still expect EPS to double in 2010, as expired energy contracts have already been largely hedged at much higher prices. We are reducing our 12-month target price by $5 to $32, a premium-to-peers p-e of 18.3 times our 2009 estimate. -J. McCann - UBS downgraded shares of Banco Santander (STD) to Sell from Neutral on valuation and the economic deterioration in Spain.
- Royal Bank of Scotland (RBS) was cut to Hold from Buy at Collins Stewart to reflect the company's outlook and capital levels.
- Diageo (DEO) was lowered to Neutral from Buy at Merrill.
- T. Rowe Price (TROW) and TreeHouse Foods (THS) were downgraded at Wachovia to Market Perform from Outperform.
- Fulton Financial (FULT) was downgraded to Neutral from Buy at B. Riley.
- Jefferies downgraded Kenexa (KNXA) to Hold from Buy following the Q3 results as they believe falling margins could lead to more downward revisions. The firm lowered their target to $8 from $13.
Analyst Hold/Neutral:
- S&P maintains hold opinion on shares of Mastercard (MA):
Before a $515 million antitrust litigation settlement, MA posts third quarter operating EPS of $2.47, vs. $2.31, $0.17 above our estimate. Revenue rose 24%, reflecting a 12% growth in purchase volume and a 13% increase in transactions. We expect revenue growth to decline going forward due to economic difficulties. MA's results reflect the strong operating leverage of its business model; expenses rose only 8.3%. We expect the company to report 2008 EPS of $8.90, We are increasing our 12-month target price to $175, a below-historical 19.7 times our 2008 EPS estimate. -S. Plesser - S&P maintains hold recommendation hold recommendation on shares of Marvel Entertaintment (MVL):
Third quarter EPS of $0.64, vs. $0.45, is well above our $0.42 estimate, reflecting substantial box office for Iron Man and DVD revenues that were not expected before 2009. Licensing revenues were down 29% on dramatically lower Spider-Man licensing. We think toy sales and associated licensing will be impacted by the weaker economy, and with no movie releases coming before 2010, we see few near-term catalysts for MVL, although we believe its long-term plan is sound. We are raising our 2008 EPS estimate to $2.51 from $1.88, but cutting 2009's to $1.20 from $1.92. Our target price remains $37. -E. Kolb
Analyst initiations:
- Jesup & Lamont also assumed coverage of Delta Air Lines (DAL) with a Buy rating and $15.50 target and believes Delta continues to reduce capacity to address the decline in forward bookings.
- Banc of America believes Kroger (KR) is well positioned following gross margin investments. The firm started shares with a Buy rating and $31 target.
- Morgan Stanley initiated Liz Clairborne (LIZ) and Jones Apparel (JNY) with Underweight ratings and Polo Ralph Lauren (RL) with an Equal Weight rating.
- Royal Bank of Scotland (RBS) was initiated with a Sell rating at ING Group.
- Jesup & Lamont believes Allegiant (ALGT) is a way to gain exposure to the airline industry without actually buying an airline stock. Shares were initiated with a Buy rating and $45 target.
Related Posts :
Sources :
- BloggingStocks: Analyst calls: PM, PFG, OMX, STD, RBS, DEO, DAL, KR, LIZ, JNY, RL ..., November 4, 2008 11:43 am
- Business Week: S&P Picks and Pans: Mastercard, Viacom, Yahoo, PPL, Marvel Entertainment, November 4, 2008, 11:23AM EST
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