Analyst Picks & Pans

Stock Picks: EBay, Starwood, URS, US Bancorp


EBay: Benchmark equity analyst Frederick Moran maintained a hold rating on shares of eBay (EBAY), the most-visited U.S. e-commerce site, on June 19. He lowered a price target on the shares to 25, from 27.

In a note, Moran said the company "has demonstrated competitive operating improvements supported by stable global e-commerce industry growth trends". The analyst said eBay will face "international currency and economic headwinds" during the second half of 2010; he estimates "a foreign currency hindrance" of 6 percent on total revenues in the second half of 2010.

For the second quarter, Moran estimates total revenues of $2.2 billion and earnings per share (EPS) of 38¢. For 2010 he projects total revenues of $9.1 billion. Calculating pro forma for the sale of the company's Skype unit, he estimates that total revenues may increase 12 percent year-over-year, with EPS of $1.68.

Starwood Hotels & Resorts Worldwide: Soleil Securities maintained a buy rating and 57 price target on shares of Starwood Hotels & Resorts Worldwide (HOT), the owner of the St. Regis and W hotel brands.

In a note, equity analyst Jake Fuller said Starwood had sold off sharply since he upgraded the shares to buy on June 15. "While we have seen positive industry data and have increased confidence in HOT's ability to [beat analysts' second-quarter estimates,] investors are clearly scaling back long-term growth targets to factor in a weaker economic outlook", he wrote.

"While [it's] tough to fight the negative economic sentiment, we see a favorable risk-reward profile and want to own HOT" into the release of second-quarter earnings on July 22, Fuller said.

URS: Wunderlich Securities equity analyst Richard Rossi reiterated a buy rating and 52 price target on shares of URS (URS) on June 29.

URS, the U.S. infrastructure-services provider pursuing Scott Wilson Group, may raise its offer for the British engineering adviser after a rival £189 million ($285.5 million) bid threatened its takeover plan, Bloomberg News reported on June 29.

CH2M Hill, a U.S. engineering adviser, on June 28 offered to buy Scott Wilson for 245 pence a share. That's 17 percent more than the agreed proposal for £161 million, or 210 pence a share, advanced by San Francisco-based URS. Shares of Scott Wilson climbed 3.6 percent, to 262 pence.

"URS has matching-rights arrangements agreed with Scott Wilson and is considering increasing its offer to 245 pence or above," the company said in a statement on June 29.

In a note, Rossi said he believes URS's proposed acquisition of Scott Wilson is "a step in the right direction", as it will strengthen the company's U.K. market position, broaden its overall overseas presence, and "add valuable additional talent to the roster".

"Scott's market strength lines up well with URS's in both the transportation infrastructure and nuclear power areas, and there should be some cross-selling opportunities, especially given Scott's strength in the high-speed rail market", Rossi wrote.

He said his price target does not reflect the potential EPS impact from the Scott acquisition, which he estimates could contribute 10¢ to 15¢ to 2011 results.

U.S. Bancorp: UBS Securities equity analyst Heather Wolf raised a rating on shares of U.S. Bancorp (USB), Minnesota's largest lender, to buy, from neutral, on June 29. She raised a price target on the shares to 29, from 28.

In a note, Wolf said that following a recent pullback in the stock, "we now see 25 percent upside potential" in the shares, reflecting increased consensus estimates from securities analysts and a higher valuation "based on superior returns".


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