Analyst Picks and Pans: McDonald's, eBay, Amazon.com

What Wall Street analysts are saying about selected stocks in the news Thursday

McDonald's Corp. (MCD)

Barclays keeps overweight

On July 23, McDonald's posted second quarter earnings of 98 cents per share, down from $1.04 a year earlier despite a 4.8% rise in global comparable-store sales (comps). Barclays analyst Jeffrey Bernstein said on July 23 that McDonald's June comps were below his and Wall Street estimates; as for July trends, the company expects comps "similar to or better than June." Bernstein said that while June a disappointment, it's a positive sign that McDonald's is not seeing further July deceleration.

Bernstein expects the stock to underperform the broader market ahead of the company's July 23 conference call based on the deceleration in June comp trends. While the company's overall results demonstrate a resilience in this

environment, the analyst continues to expect future near-term earnings will lack meaningful upside, due to macro-pressures and foreign currency effects. Bernstein his reviewing his estimates.

eBay Inc. (EBAY)

RBC Capital upgrades to outperform from sector perform

Shares of eBay Inc. jumped in premarket trading July 23 as analysts read signs of stabilization in the online marketplace's core business and ongoing progress in its turnaround efforts in its financial results for the second quarter.

EBay reported earnings on July 22 just ahead of the closing bell. EBay said its earnings fell 29% and sales slid 4.4% from a year ago, but adjusted results topped analysts' expectations. The company's guidance was also in line with Wall Street estimates, with a better-than-expected revenue outlook.

RBC Capital analyst Stephen Ju said on July 23 he's been waiting over a year for an acceleration in items sold, which he views as the most important metric for signaling a marketplaces turnaround. With EBAY posting 2.7% growth in items sold in the second quarter after a 1.6% drop in the first, Ju said he's seen enough to take a more constructive stance, as he believes this is the first tangible inflection point in his recovery thesis.

The analyst raised his 2009 earnings estimate from $1.51 per share to $1.55 and sees earnings at $1.63 in 2010. He raised his $16 price target on the stock to $24.

Amazon.com (AMZN)

ThinkEquity rates buy

When Amazon.com Inc. releases second-quarter results after the close of regular trading July 23, investors will get a better idea of how the economy is hurting -- or helping -- the leading online retailer.

Analysts polled by Thomson Reuters expect Seattle-based Amazon to report a profit of 31 cents per share on $4.69 billion in revenue. Amazon predicted second-quarter sales would rise to between $4.30 billion and $4.75 billion.

In the year-ago quarter, Amazon earned 37 cents per share on $4.06 billion in revenue.

A decline in second-quarter earnings is likely to stem at least in part from a $51 million payment Amazon agreed to make to toy seller Toys R Us to settle a long-standing dispute between the former partners. Amazon said in June that it would charge the payment as operating expenses during the second quarter, but declined to say how it would hurt results for the period. In a recent note to investors, ThinkEquity analyst Ed Weller predicted the charge will lower earnings by 7 cents per share.

Weller, who rates Amazon shares "Buy" with a $105 price target, said he doesn't expect any major surprises from the company's report.

"We expect the number of active customers to be up in the 16 percent range and sales per average customer, about sideways, a strong number, we think, considering the (foreign exchange) headwind and the assumed relative weakness of big-ticket goods," he said.

He thinks Amazon's sales will be "a little less robust" than in the first quarter, due in part to overall economic weakness.

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