Stock Picks: Best Buy, Google, Palm, Railroads

Wall Street analyst opinions on stocks making headlines in Friday's market

Best Buy Co.: Goldman Sachs analyst Matthew Fassler raised a rating on shares of Best Buy Co. (BBY) to buy from neutral on Mar. 19.

In making the rating change on the world's largest electronics retailer, Fassler cited the current consumer electronics product cycle and a macroeconomic recovery, and said the stock trades at one of the lowest valuation multiples in hardlines retailing, "even on trailing earnings after the worst year for consumer spending in recent memory".

Other, incremental catalysts for the stock cited by Fassler included an upward revision to TV sales forecasts; and better consumer electronics retail sales in last week's government report for February, which he said reduced risk to fourth-quarter earnings per share (EPS).

Fassler said he was inching his EPS estimates higher: for 2010, by 6 cents to $3.33; and for 2011, by 5 cents to $3.53, all on "slightly higher" sales.

He also raised a 12-month price target on the shares to $47 from $44.

Google Inc.: Standard & Poor's equity analyst Scott Kessler reiterated a buy opinion on shares of Google Inc. (GOOG) on Mar. 19

China Business News reported on Mar. 19 that the search engine may pull out of China on April 10, citing an unidentified Chinese sales agent for the company. Google may announce its exit on Mar. 22, the Shanghai-based newspaper reported, citing an unidentified Google China employee. It may also reveal plans for its China workforce on the same day, according to the report.

The company hasn't confirmed the April 10 date for its pullout, the newspaper cited the sales agent as saying. Tokyo-based spokeswoman for the company, Jessica Powell, declined to comment on the report.

In a posting on the S&P MarketScope service, Kessler said Google shares had been active and lower in pre-market trading on Mar. 19 after the China Business Daily report was cited in a Bloomberg News story.

"We expect Google to extricate itself from this market, and note these operations accounted for less than 1% of revenues in 2009, based on our calculations," said Kessler.

The analyst said he thinks Google has been negotiating with the Chinese government to try to retain a presence in the country with other offerings and R&D operations; Kessler sees "a 50/50 chance" of this occurring.

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