Stock Picks: Citi, Goldman, Palm, Yahoo

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Palm Inc.: Morgan Keegan equity analyst Tavis McCourt downgraded a rating on shares of Palm Inc. (PALM) to underperform from market perform on Apr. 19.

In a note, McCourt said that the downgrade came after the maker of the Treo filed a Form 8-K with the SEC on Apr. 16 saying that Michael Abbott, its senior vice-resident of software and services, has resigned effective Apr. 23. McCourt noted that Palm also said that five other executives, including chief financial officer Doug Jeffries, received a total of nearly 1.2 million restricted shares; and that two officers, including Jeffries, got $250,000 retention bonuses.

"[T]hese are not actions that inspire confidence about PALM's ability or willingness to sell out at a premium valuation" in the near term, McCourt said.

Yahoo! Inc.: Kaufman Bros. equity analyst Aaron Kessler kept a buy rating and $20 target price on shares of Yahoo Inc. (YHOO), owner of the second-most-used U.S. Internet search engine, on Apr. 19.

Kessler said in a note that after the close of trading Apr. 20, he expects Yahoo to report revenues toward the midpoint of the company's earlier guidance of $1.575 billion to $1.675 billion, and earnings before interest, taxes, depreciation and amortization (EBITDA) toward the high end of its guidance of $355 million to $375 million. His estimates call for $1.672 billion in gross revenues, $1.183 million in net revenues, $393 million in EBITDA, GAAP EPS of 10 cents, and pro forma EPS of 14 cents. He noted that the Wall Street consensus estimates are for $1.167 billion in net revenues and 9 cents GAAP EPS.

"We expect a neutral reaction for Yahoo shares given our expectation for improved display growth but continued share losses in search," Kessler wrote. He said that on the company's conference call with analysts, he would focus on "the timing of the search transition, Yahoo's ability to stabilize search market share, schedule of the rollout of its global technology platform, as well as any new initiatives".

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