Analyst Picks and Pans

Analyst Picks and Pans: General Mills, VeriSign, MannKind


General Mills (GIS)

RBC Capital keeps outperform

RBC Capital analyst Edward Aaron noted on June 8 that General Mills said fiscal 2009 (May) earnings per share (EPS) will top guidance of $3.87-$3.89 by "several cents," reflecting good operating momentum and a lower tax rate. Aaron said the news confirms his view that a fourth-quarter EPS beat will put the company's story back on track. He noted that the stock has been a laggard following a third-quarter EPS shortfall; it's off 14% year-to-date, vs. a flat S&P Packaged Food index benchmark. As such, he expects a positive reaction to the news.

Aaron added that while the company did not provide fiscal 2010 guidance, it expressed comfort with the $4.15 consensus EPS estimate. He has EPS estimates of $3.92 for fiscal 2009 and $4.18 for fiscal 2010; his $60 price target is under review.

VeriSign Inc. (VRSN)

Cowen keeps neutral

Cowen analyst Walter Pritchard, in a June 8 note, said that on June 5, a forgotten court ruling was overturned on appeal, likely increasing investor concern surrounding VeriSign's presumptive right of renewal and ability to raise prices on the '.com' registry. Pritchard noted that while the timing going forward is uncertain, the case represents an additional source of uncertainty that could result in stock continuing to lag its industry peers.

Pritchard said the previous case will now proceed or else Verisign can appeal to the U.S. Supreme Court; either way, the timing will likely drag out for years.

MannKind Corp. (MKND)

Rodman & Renshaw reiterates outperform

After MannKind reported positive results for its Afresa product, Rodman & Renshaw analyst Simos Simeonidis said the results solidify his view that Afresa can be a product that could take market share away from injectable insulins and become a significant player in the diabetes space.

Simeonidis also reiterated his $14 price target based on: 1) Afresa is a "better" insulin, 2) the company should be able to secure a worldwide partnership, 3) he likes Afresa's chances of getting approval next spring, and 4) that it's a product that in the long run, has the potential to become a multi-billion dollar drug/device combination.


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