Stock Picks: Apple, Intel, Aetna, H&R Block

(page 2 of 2)

Aetna Inc.: Collins Stewart analyst Brian Wright lowered his rating on shares of Aetna Inc. (AET) to sell from hold on Mar. 9.

Wright said in a note that he believes near-term pressure on the shares is likely as he see the consensus estimate of Wall Street analysts of $3.12 EPS for 2010 as "too high". The analyst has a $2.60 EPS estimate for Aetna in 2010.

"We believe consensus estimates assume a greater degree of gross margin improvement in the commercial business than our modest 30 basis points improvement outlook," Wright wrote. His outlook is for "modest" improvement, based on continued pricing pressures and a cost trend that has accelerated in 2009.

The analyst established a near-term target price target of $24 on the shares.

H&R Block Inc.: Oppenheimer analyst Scott Schneeberger reiterated a perform rating on shares of H&R Block Inc. (INTC) on Mar. 9.

On Mar. 8, H&R Block, the biggest U.S. tax preparer, posted a fiscal third-quarter profit that exceeded most Wall Street estimates that were pared after the company said it would miss its 2010 earnings forecast.

Net income rose to $50.6 million, or 15 cents a share, for the period ended Jan. 31, from $47.4 million, or 14 cents, in the same period a year earlier. Profit from continuing operations was 16 cents a share, a penny more than the average estimate of nine analysts surveyed by Bloomberg.

In a Mar. 9 note, Schneeberger said that H&R Block's third quarter EPS from continuing operations of 16 cents exceeded his estimate of 10 cents. "However, the good news ended there," Schneeberger wrote, as "year-to-date tax metrics through Feb. 28 deteriorated from already disappointing YTD performance through Feb. 15". Schneeberger said H&R Block appears on track to lose over a million storefront customers in fiscal 2010 after losing more than 914,000 in fiscal 2009.

Schneeberger also noted that H&R Block management "did not reinstate guidance after pulling it 12 days ago on poor ... YTD results [through Feb. 14]".

The analyst maintains a fiscal 2010 EPS estimate of $1.38 and a fiscal 2011 forecast of $1.52.

Business Exchange

Track and share business topics across the Web.