Analyst Actions: GM, Citigroup, RIM, Nike

From Standard & Poor's Equity Research

GOLDMAN DOWNGRADES GENERAL MOTORS TO SELL FROM NEUTRAL

Goldman Sachs analyst Patrick Archambault says his auto coverage universe has declined significantly but thinks there is more to go; he anticipates escalating headwinds from volume/mix pressures driven by gas prices, falling confidence and tightening credit.

He expects General Motors (GM) shares to continue to underperform as market fundamentals deteriorate, which exacerbates liquidity concerns. He thinks GM's automotive cash flow burn this year and next is likely to lead it to look to raise capital, which he believes could lead to significant shareholder dilution and/or a cut to the company's dividend.

Archambault cuts GM price target to 11. He also downgrades Lear (LEA) to sell from neutral; and Tenneco (TEN) to neutral from buy.

GOLDMAN ADDS CITIGROUP TO AMERICAS CONVICTION SELL LIST

Goldman Sachs analyst William Tanona says he sees multiple headwinds for Citigroup (C), including additional write-downs, higher consumer provisions as a result of rapidly deteriorating consumer credit trends, potential for additional capital raises, dividend cuts, or asset sales.

Tanona estimates that Citi will take additional $8.9 billion in net write-downs during the second quarter, comprised mainly of CDOs and associated hedges with monolines, along with number of other asset classes and mark-to-market of their own structured note liabilities.

He lowers 6-month price target to 16, which assumes the stock will trade at 1.4 times his yearend tangible book value of roughly $11.

He keeps a Conviction Buy on Morgan Stanley (MS) -- he recommends a long MS/short C pair trade.

NEEDHAM MAINTAINS HOLD ON RESEARCH IN MOTION

Needham analyst Charlie Wolf says Research in Motion's (RIMM) first quarter results were virtually in line; $0.84 EPS was $0.02 below estimates due to higher-than-expected operating expenses, while $2.24 billion revenues were exactly in line. He notes, however, the stock's downward price action following the release indicates investors expected much more.

Wolf says he still believes that RIM is impregnable in the enterprise market. But, in contrast with management's view, he also believes growing competition in the consumer market (from Apple (AAPL) and Google (GOOG)) poses a risk to BlackBerry's supercharged growth in this market.

As such, he maintains his hold rating. He also maintains his $4.05 fiscal year 2009 (February) EPS estimate. He sees $6.25 EPS for fiscal year 2010.

CREDIT SUISSE CUTS ESTIMATE BUT REITERATES OUTPERFROM ON NIKE

Credit Suisse analyst Omar Saad says Nike's (NKE) fourth quarter EPS beat consensus, sales and gross margin are better than expected, and the company is taking share in a weak U.S. market and generating fantastic growth in key emerging markets.

However, Saad notes SG&A expenses ballooned 410 basis points and are expected to remain high throughout the first half of fiscal year 2009 (May). He says Nike's spending more to grow more may turn off investors looking for instant gratification, but he thinks the company's strategy will pay huge dividend in the long run.

Given prospect of higher marketing spend and lower interest income, he cuts $4.15 fiscal year 2009 EPS estimate to $3.97. He sees any weakness as attractive buying opportunity for investors not spooked by high spending. He keeps 85 price target on the stock.