Analyst Picks & Pans February 3, 2010, 12:25PM EST

Stock Picks: Time Warner, Polo Ralph Lauren

Plus Wall Street analyst opinions on Brink's Co. and Monolithic Power

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Standard & Poor's Equity research keeps buy

Time Warner Inc., owner of the Warner Bros. studio and the HBO cable channel, posted fourth-quarter profit that topped analysts' estimates on Feb. 3. Net income of $627 million, or 53 cents a share, compared with a loss of $16 billion, or $13.41, a year earlier. Excluding items such as costs to cut magazine jobs, profit rose to 55 cents, beating the 52-cent average of analysts' estimates compiled by Bloomberg.

S&P equity analyst Tuna Amobi kept a buy rating on Time Warner shares on Feb. 3. Amobi said that the company's fourth-quarter earnings per share (EPS) from continuing operations of. 55 cents (before 4 cents in charges), vs. 19 cents one year earlier, was 2 cents shy of S&P's estimate and 4 cents over the Wall Street consensus forecast. The company's studio operations were "solid as expected", said Amobi, mainly on home video sales of Harry Potter and the Half-Blood Prince and The Hangover. The company's TV networks were "mixed", hed added, but the publishing unit appeared to reap some gains from restructuring efforts

Amobi said that Time Warner issued guidance for growth at a mid-teens percentage rate in 2010 adjusted EBITDA, and raised its quarterly dividend by 13% to an annual rate of 85 cents; the company also raised its share buyback capacity to $3 billion from $1 billion. "Added to sizable financial capacity, we also infer management's increased confidence in underlying business trends," said Amobi.

Polo Ralph Lauren Corp. (RL)

UBS keeps buy

Shares of Polo Ralph Lauren Corp., the designer of Chaps and Club Monaco clothing, fell the most in a year on Feb. 3 after reporting a 0.6% drop in third-quarter revenue to $1.24 billion. The company said sales for the year ending April 3 would fall in the "low single-digit" range in percentage terms, compared with an earlier projection for a "mid-single-digit" decline.

Polo fell $7.10, or 8.3 percent, to $78.57 at 10:23 a.m. in New York Stock Exchange composite trading, after earlier dipping to $78.21 for the steepest drop since January 2009. The shares jumped 78% last year.

UBS analyst Michael Binetti kept a buy rating on Polo shares on Feb. 3, noting that its third-quarter EPS of $1.10 beat his $1.04 estimate and the Wall Street consensus forecast of $1.01; he said he thinks investors "were looking for $1.20 or more". Binetti said he believes the mixed quality of third-quarter results could present a stock buying opportunity for what he still views as "one of the most compelling 1-2 year global growth stories in large-cap apparel".

Binetti said his current model for Polo sees EPS of $4.37 in fiscal 2010 and $4.81 in fiscal 2011. He said he would revisit his model after the company's 9:00 am ET conference call on Feb. 3. He has a $92 price target on the shares.