Analyst Picks & Pans

Stock Picks: Dell, Intercontinental Exchange, RIM


Dell: Standard & Poor's equity analysts Thomas Smith and Jim Yin maintained a hold rating on shares of Dell (DELL) on Aug. 16.

Dell, the world's third-largest personal-computer maker, agreed on Aug.16 to buy 3Par for about $1.15 billion, gaining equipment and software products to bolster its growing corporate data-center business.

3Par (PAR) investors will get $18 a share in cash, Dell said in a statement today. That's almost double the stock's closing price of $9.65 on Aug. 13. 3Par, based in Fremont, Calif., makes hardware and software for reducing information-storage requirements.

Dell is seeking to compete with such companies as Hewlett-Packard (HPQ) and International Business Machines (IBM) in the market for more complex computer systems and technology services that yield higher profits than desktop and laptop PCs. Dell said in June that it plans to double the size of its data-center and technology-services business in part through acquisitions.

"We believe this acquisition strengthens DELL's presence in cloud computing, which we project to be a rapidly growing market segment," the analysts wrote in a posting on the S&P MarketScope service. They said they see "significant synergy" in the deal, including broader distribution for 3Par's products.

"However, we are concerned about the potential conflict with DELL's partnership with EMC," they wrote.

Dell offers enterprise storage systems in conjunction with EMC.

Intercontinental Exchange: Credit Suisse equity analyst Howard Chen raised a rating on shares of Intercontinental Exchange (ICE), an operator of global commodity and financial product marketplaces, to outperform from neutral on Aug. 16. He has a $125 price target on the shares.

"We view recent share price weakness from concerns of near-term seasonally weaker activity levels, confidence in longer-term growth, and timing of regulatory payoff as a buying opportunity for a strong franchise," Chen wrote in a note.

The analyst said ICE management "continues to execute well," while its businesses are leveraged to "less mature" asset classes (such as energy, commodities, and credit). Chen said he believes ICE remains a longer-term beneficiary of financial service reform.

"Longer term, we believe secular growth drivers are intact, including [a] continued push toward active risk management … global expansion, and the higher degree of volatility inherent in commodities and energy prices vs. other asset classes," Chen said.

Research In Motion: Kaufman Bros. equity analyst Shaw Wu maintained a buy rating and $85 price target on shares of Research In Motion (RIM) on Aug. 16.

In a note, Wu said he "spent half a day" using RIM's new BlackBerry Torch smartphone. "Overall, the BB Torch more or less met our expectations," he said. "We find the BlackBerry 6 operating system [to be] a huge improvement, with the Web browsing, multitouch gestures, and universal search."

Wu said he believes the new Social Feeds app (which provides centralized access to Twitter, BlackBerry Messenger, and Facebook) helps RIM "maintain its position as the platform of choice for heavy users." He said the "fit and finish" of the Torch user interface "felt a little sluggish and cluttered at times."

"We find the product strong enough to prevent BlackBerry customers from defecting and perhaps win some Android and iPhone customers who value the physical keyboard, social networking, and battery life," Wu said.


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