Analyst Picks & Pans February 19, 2010, 11:31AM EST

Stock Picks: Dell, CBS, Schlumberger, First Solar

Wall Street analyst opinions on stocks making headlines in Friday's market

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Dell Inc.: R.W. Baird analyst Jayson Noland maintained a neutral rating on shares of Dell Inc. (DELL) on Feb. 19. After the close of trading Feb. 18, the world's third-largest personal-computer reported that holiday sales of low-priced PCs and higher component costs http://www.businessweek.com/news/2010-02-19/dell-declines-after-price-cuts-component-costs-crimp-earnings.html. Gross margin, the percentage of sales that remain after deducting production costs, was 17.4%, below the 18% projected on average by analysts.

Fourth-quarter net income slipped to $334 million, or 17 cents a share, from $351 million, or 18 cents, a year ago. Sales rose 16% to $14.9 billion, beating the average estimate of $13.8 billion. Profit before some costs was 28 cents a share.

Noland said in a Feb. 19 note that fourth-quarter earnings per share (EPS) and revenue figures exceeded the Wall Street consensus view. He said the revenue outperformance were due to better-than-expected results from the company's hardware businesses. Noland noted that gross margins were down 90 basis points from the preceding quarter, which management attributed to increased contribution the Consumer segment and component constraints.

The analyst cut his $1.32 fiscal 2011 (ending January) EPS estimate to $1.26. He said he "remains on the sidelines" given concerns around the timing of a broad-based PC replacement cycle, the integration of the acquired Perot Systems unit, and further acquisitions. He has a $17 price target on the shares.

CBS Corp.: Goldman Sachs analyst Drew Borst reiterated a neutral opinion on shares of CBS Corp. (CBS) on Feb. 19.

After the close of trading Feb. 18, CBS, owner of the most-watched U.S. broadcast network, said fourth-quarter profit fell 57% after advertising sales dropped at its radio stations and billboard unit. Net income declined to $58.8 million, or 9 cents a share, from $136.1 million, or 20 cents, a year earlier. Excluding a writedown to the value of radio assets and other items, profit of 25 cents met the average of analysts' estimates compiled by Bloomberg.

Borst said in a Feb. 19 note that the adjusted EPS figure of 25 cents was in line with his estimate and the consensus view of Wall Street analysts. Revenue was 2% ahead of his estimate, but EBITDA (earnings before interest, taxes, depreciation and amortization) missed his estimate by 4% due to higher than expected operating expenses at the company's entertainment division. Borst said CBS highlighted three themes for 2010, which he believes are largely factored into 2010 consensus estimates: better advertising trends, cost cutting, and rising retransmission fees from cable operators.

Borst noted that in a departure from the past, the company did not provide 2010 EBITDA guidance. He raised EPS estimates for 2010 to 93 cents from 90 cents; for 2011 to $1.13 from 98 cents; and for 2012 to $1.26 from $1.09. He also increased his 12-month price target to $14 from $13.