Analyst Picks & Pans
Stock Picks: Google, Apple, Dow Chemical
Kaufman Bros. maintains buy
Kaufman Bros. analyst Aaron Kessler said on Jan. 6 that he believes Google's launch of the Nexus One smartphone, announced Jan. 5, and other mobile initiatives are intended to accelerate the adoption of mobile advertising in both display and search.
On Jan. 5, Google, owner of the most-popular Internet search engine, announced the Nexus One, which features a 3.7" OLED display and a 1GHz Qualcomm Snapdragon chipset and runs on Google's Android 2.1 operating system. The phone is available for purchase on Google's web site for a price of $529 unlocked or $179 from partner T-Mobile with a two-year agreement. The phone will also be available later in 2010 on the Verizon and Vodafone networks.
Kessler noted that Google will launch additional phones through its online storefront with carrier and hardware partners, which "should help ease concerns that Google is trying to aggressively compete with partners". The analyst said Android-based phones "should help accelerate adoption of mobile advertising, but the long-term opportunity [is] still unclear and the near-term market [is] likely to remain small.
Kessler has a $645 price target on Google shares.
Apple Inc. (AAPL)
Standard & Poor's Equity Research maintains buy
S&P equity analyst Clyde Montevirgen noted on Jan. 6 that Apple, maker of the iPhone, has acquired private mobile advertising company Quattro Wireless, according to comments made by Quattro on its website. No financial information was specified, said Montevirgen, also noting that Apple has not commented on the deal.
"Although we do not see an immediate impact on the company's financials, we believe that the deal will support development for mobile applications, which we believe is a key factor in the success of the iPhone and iPod and for future devices such as the tablet," wrote the analyst in a note.
Dow Chemical Co. (DOW)
Barclays Capital upgrades to overweight from equal-weight; raises estimate, price target
Barclays Capital analyst Sergey Vasnetsov upgraded his opinion on Dow Chemical on Jan. 6, saying he expects the world's largest chemicals maker to benefit from its aggressive cost-cutting and its leverage to an industrial and consumer recovery in 2010-11, resulting in rapidly rising earnings per share (EPS) in 2010-13.
"Within the large-cap group, we find DOW has by far the largest operational and financial leverage to the improving cycles (industrial and commodity)," Vasnetsov wrote in a note. "In addition, DOW's stock looks cheap [based on] cycle-average EPS and EBITDA [earnings before interest, taxes, depreciation and amortization]," he wrote.
The analyst lifted his 2010 EPS estimate from $1.38 to $1.55 and his price target from $30 to $40. Robert Half International (RHI) Manpower Inc. (MAN)
Citigroup upgrades both to buy from hold
Citigroup analyst Ashwin Shirvaikar upgraded shares of two employment services companies on Jan. 6, given improving signs in the temporary employment sector over the past several months and optimism on long-term secular trends in the staffing market. Shirvaikar believes Robert Half and Manpower are both well-positioned from an operating and balance sheet perspective to capitalize on a global economic recovery and higher penetration rate of temporary workers in the overall labor force.
While Shirvaikar thinks near-term data and stock-price actions could remain "choppy", the analyst believes both companies are compelling investment opportunities over the long term.
Sonic Corp. (SONC)
Morgan Keegan downgrades to market perform from outperform; lowers estimates
Morgan Keegan analyst Robert Derrington lowered his rating on Sonic Corp. on Jan. 6. Derrington said in a research note that Sonic, the largest U.S. chain of drive-in restaurants was "not for the faint of heart"; he downgraded the shares given "the related volatility in consumer spending, industry competition and the difficult macroeconomic environment".
The analyst said that following Sonic's much weaker than projected first-quarter results, and with much more cautious expectations from management, he trimmed his fiscal 2010 EPS estimate from 80 cents to 64 cents. He also lowered his fiscal 2011 EPS projection from 90 cents to 80 cents.