Analyst Picks & Pans

Stock Picks: Adobe, American Superconductor, First Solar, Progressive


Adobe Systems: Janney Montgomery Scott equity analyst Sasa Zorovic reiterated a buy rating and $40 fair value estimate on shares of Adobe Systems (ADBE), the world's biggest maker of graphic-design programs, on June 18.

In a note, Zorovic said he surveyed more than 50 current Adobe users over the past week and found that nearly 40 percent of the users had already upgraded to the company's Creative Suite 5 (CS5) software offering, "indicating, in our view, a very strong start to the product cycle" for CS5.

"However, the high price point is keeping nearly half of those who have not upgraded yet on the fence," the analyst wrote. "[T]his is notable, given that 50 percent of the respondents in our survey indicated that the business environment is improving."

American Superconductor: Wunderlich Securities equity analyst Theodore O'Neill reiterated a buy rating and $50 price target on shares of energy-technology company American Superconductor (AMSC) on June 18.

"We believe American Superconductor represents one of the best opportunities in a U.S.-based wind energy company," O'Neill wrote in a note. He said the company is "experiencing nearly two times the industry average growth rate," with revenue up 73 percent in fiscal 2010 (ended March).

"Although we forecast the rate to slow, we expect profitability to improve significantly," O'Neill said.

The company is on track to post $1.95 in non-GAAP earnings per share (EPS) in 2011, the analyst said.

First Solar: Citigroup equity analyst Timothy Arcuri maintained a hold rating on shares of First Solar (FSLR), the world's largest manufacturer of thin-film solar power modules, on June 18. He raised a price target on the shares to $140 from $125.

In a note, Arcuri said he updated his forecasts for First Solar to reflect better second-half pricing due to a "significant" rollback in the company's German rebate program and the announcement of four new manufacturing lines in Germany.

Arcuri raised estimates for 2010 revenue to approximately $2.68 billion, from $2.59 billion, and to approximately $3.75 billion, from $3.5 billion, for 2011. He hiked EPS projections for 2010 to $7.43 from $6.51, for 2011 to $7.64 from $6.29, and to $10 per share from $9.55 for 2012.

Progressive Corp.: Credit Suisse equity analyst Vinay Misquith reiterated a neutral rating and $22 price target on shares of insurer Progressive Corp. (PGR) on June 18.

"We came away from [an investor meeting] more positive that policy in force (PIF) growth would continue in the near term," Misquith said in a note, although revenues "would likely grow less than PIF."

The analyst said he believes Progressive's margins will be constrained in the near term as the company continues to invest in the growth of its direct sales channel, "though profitability should improve in later years as the company reaps the benefits of lower acquisition costs over a larger premium base."


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