Analyst Actions: UAL, Electronics for Imaging, Macrovision

Plus: opinions on O'Reilly Automotive and AnnTaylor

From Standard & Poor's Equity Research

JP MORGAN UPGRADES UAL TO OVERWEIGHT FROM NEUTRAL

JP Morgan analyst Jamie Baker says over-inflated divestiture assumptions recently contributed to UAL (UAUA) shares touching $52, a level not seen since oil cost the same. But at $26, he says he can longer resist. He says, with UAUA shares having fallen back to earth, and as part of his renewed recessionary bullishness, he upgrades the stock.

Baker notes equities have consistently shed 40% going in, only to rally over the next year as a recession plays out. And although there is still growing risk of 2008 loss production and a workforce prone to agitation, he thinks these same risks are palatable at half the price. Though the industry loses money a third of the time, he thinks the equities are still worth something.

COLLINS STEWART DOWNGRADES ELECTRONICS FOR IMAGING

Collins Stewart analyst James McIlree says he is downgrading Electronics for Imaging (EFII) to sell from hold, sets $11-$13 price target range. He notes he's asserted for some time that EFII's controller segment is a maturing business and susceptible to economic cycles. He believes these were factors responsible for the company's pre-announcement.

McIlree says he's incorporated much lower controller revenue estimate for 2008, based on assumption of a slower economy, particularly in the hard-hit financial sector, a key customer segment for copiers. He thinks another major issue is EFII's expense structure, which needs to be slashed to achieve its goal of 18%-20% operating margin.

He cuts EPS estimates of $1.35 for 2007 to $1.22, and $1.43 for 2008 to $1.07.

JEFFERIES UPGRADES MACROVISION TO BUY FROM HOLD

Jefferies analyst Ross MacMillan says he thinks there is money to be made owning Macrovision (MVSN). He thinks the stock looks cheap if the GMST deal does not happen, trading on 5.5 times 2008 EV/EBITDA. If a deal does get done, he thinks investors can still get paid, although it might take longer and is subject to more variables.

MacMillan notes that his $23 price target for the combined business is based on the stock. The shares are trading on 9.5 times 2009 EV/EBITDA post disposals. He maintains $1.42 2007 and $1.74 2008 EPS estimates.

GOLDMAN CUTS ESTIMATES, TARGETS ON O'REILLY AUTOMOTIVE AND ADVANCE AUTO PARTS

Goldman Sachs analyst Matthew Fassler says he is cutting his $0.39 fourth quarter EPS estimate for O'Reilly Automotive (ORLY) to $0.35 on stubborn expense trends due to higher pre-opening expenses. He lowers $1.98 2008 EPS estimate to $1.80 on reduced same-store sales growth and modest operating margin contraction. He cuts $38 price target to $32.

Fassler thinks signs of macro pressure on this very-high quality operator in a sector perceived as defensive are notable, but sales trends concerning. He says year-over-year gas increases at the pump are likely contributing to soft sales. But now he sees his forecasts as realistic and keeps buy opinion on O'Reilly.

For Advance Auto Parts (AAP), he cuts $0.38 fourth quarter EPS estimate to $0.37, and $2.72 for 2008 to $2.67; he also lowers $41 target to $40. AAP remains his top auto parts pick, and he keeps it at buy.

RAYMOND JAMES CUTS ANNTAYLOR STORES TO MARKET PERFORM FROM OUTPERFORM

Raymond James analyst Samantha Panella says AnnTaylor's (ANN) December comps fell 9.4% year-over-year, significantly below her forecast for a -2.4% and the Street's view for 1.7% decrease. As a result of lower-than-expected sales, ANN reduced its fiscal year 2008 (January) EPS guidance to $1.80-$1.85 from $2.05-$2.15.

For the fourth quarter, she's cutting EPS view to $0.18 from $0.44, which reflects net sales of $602 million vs. her prior forecast of $631 million, and an operating margin of 2.9% (down from prior estimate of 6.9%). In addition, she cuts $2.06 fiscal year 2008 EPS estimate to $1.80, while her fiscal year 2009 estimate is under review.

While a rating change is a bit late, given stock's recent decline, it is difficult to remain bullish given disappointing results, she says.