Analyst Picks and Pans: Aetna, Corning, Owens-Illinois

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

Aetna Inc. (AET)

Barclays says guidance cut was worse than expectations

Barclays analyst Joshua Raskin said on July 27 that Aetna's reduced guidance was meaningfully worse than expectations. He noted that Aetna now sees $2.75-$2.90 2009 operating earnings per share, down from it previous $3.55-$3.70 guidance, a reduction of about 22%, which comes on top of its June 2 guidance cut of 7%. Raskin said the cut is apparently due to a continuation of the same factors cited by the company earlier, though the magnitude must be worse.

Raskin said the biggest problem with the report is that Aetna now appears to have little grasp on its current levels of profitability, which brings large amounts of doubt to the forecasts for future periods.

Corning Inc. (GLW)

RBC Capital raises estimate, price target

RBC Capital analyst Mark Sue said on July 27 that the company's revenue was slightly better that expected, wjhile its non-GAAP earmnings per share beat the Wall Street consensus. However, Corning is nonetheless conservatively guiding for flattish to slightly up display shipments in the third quarter with flattish margins and a possible sequential decline in volumes in the fourth quarter, he notes.

Sue said that with Corning now restoring idled production capacity to catch up with the increased demand, he views the outlook as conservative. He raised his $1.50 20 earnings per share estimate to $1.60. He upped his price target to $19, 12 times his new 2010 EPS estimate. The analyst kept his sector perform rating on the shares.

Owens-Illinois (OI)

KeyBanc raises price target, keeps buy

Expectations for strong second-quarter results at Owens-Illinois Inc. led KeyBanc analyst Christopher D. Manuel to boost his share price target on the glass maker on July 27.

Manuel anticipates that strong domestic results will make up for continued weakness in the European business of the Perrysburg, Ohio-based company.

"We believe results from the European segment could still be underwhelming given the lag in inventory correction compared to North America and production curtailments; however, we believe strength in North America will be more than enough to offset weakness in Europe in the quarter," he wrote in a client note.

The analyst, who has a "Buy" rating on the stock, raised his price target on the shares to $40 from $33.

Manuel reiterated his 2009 earnings-per-share estimate of $2.50 and his 2010 estimate of $3.30. However, he called those projections "conservative."

Owens-Illinois is scheduled to report its second-quarter results on July 29.

Business Exchange

Track and share business topics across the Web.