Analyst Actions: Google, Rite Aid, USEC, Cott

Opinions on various stocks on Tuesday

From Standard & Poor's Equity Research

UBS FINANCIAL CUTS TARGET, ESTIMATES FOR GOOGLE

UBS Financial analyst Benjamin Schachter says comScore's paid clicks report for January 2008 showed Google's (GOOG) actual paid clicks were flat year-over-year, continuing a decidedly negative trend. Given that queries were up, he says the disappointing paid clicks number is a result of Google's coverage (47.6%) and click through rate (10.4%), which is the lowest ever in comScore since July 2006.

Schachter thinks this suggests either: Google is actively managing these metrics down; dataset is incorrect; or advertisers are buying fewer keywords, or some combination of the three.

He cuts 2008 EPS estimate to $20 and 2009 forecast to $24.10. He says without meaningful monetization improvement and new revenue streams, near-term numbers are at risk. He cuts his price target for Google shares to 590. He maintains a buy opinion on the stock.

JP MORGAN UPGRADES RITE AID TO OVERWEIGHT FROM NEUTRAL

JP Morgan analyst Lisa Gill says as of Monday's market close, Rite Aid (RAD) stock was down 36% since the company posted third quarter results on Dec. 20, 2007, and down 59% since the close of the Brooks Eckerd deal in early June 2007. She notes this drop has been driven by weak third quarter results, reduced fiscal year 2008 guidance, weak December same-store sales and a number of other factors.

Gill believes, however, that at recent prices the risk/reward profile has become more favorable, and downside from here should be relatively limited. She also believes two near-term catalysts -- February same-store sales (3/6) and fourth quarter results/initial fiscal year 2009 guidance (4/10) -- could exceed current forecasts.

JEFFERIES CUTS ESTIMATES FOR USEC

Jefferies analyst Laurence Alexander says excluding a $0.03 tax benefit, USEC's (USU) fourth quarter EPS was $0.13. He notes USEC sees $1.7-$1.8 billion 2008 sales. He notes the company also indicated gross margins should decline to 13%-14% (vs. 14.9% in 2007) due to higher costs for energy and Russian separative work units (SWU).

Alexander cuts $0.73 2008 EPS estimate to $0.20, which includes $0.46 headwind from higher advanced technology expenses. Notes for 2009, USEC expects SWU volumes to return to 2007 levels, with better pricing, but the scope of further uranium sales remains uncertain. He cuts $0.83 2009 EPS estimate to $0.50.

He also cuts 12 price target to 11 to reflect rising ACP costs. He maintains a buy opinion on the stock.

UBS DOWNGRADES COTT

UBS analyst Kaumil Gajrawata says he's downgrading Cott (COT) to neutral from buy and cutting his 8.00 target price to 4.50, reflecting his new lower EPS estimates of $0.07 for 2008 and $0.19 for 2009.

Gajrawata notes that Beverage Digest reported in a note published on Friday that Cadbury Schweppes (CSG) was likely gaining incremental shelf space at Wal-Mart (WMT ) for Royal Crown and Diet Rite at the expense of Sam's Choice, the retailer brand produced by Cott.

While opinion amongst bottlers is mixed as to whether or not the deal is already completed, he says the implications are significant for Cott, as Wal-Mart represents about 38% ($700 million) of Cott's total revenue.