Analyst Picks and Pans

Analyst Picks and Pans: BEAV, HOLX, EXR


BE Aerospace (BEAV)

Cowen upgrades to outperform from neutral

Cowen analyst Gautam Khanna said on May 5 that BE Aerospace was upgraded for upside operating leverage as spare parts de-stocking by customers abates. The analyst also cited rising free cash flow and lower interest expense. Khanna said the stock is oversold at 8 times price-to-earnings (i.e., 24%, which less than peers) despite an estimated 2010 EPS upturn. Khanna sees a 3-to-1 risk/reward over one year.

Khanna raised his $1.39 2009 EPS estimate to $1.44, and his $1.58 2010 forecast to $1.72.

Hologic (HOLX)

ST Robinson Humphrey cuts to neutral from buy

ST Robinson Humphrey analyst Jonathan Block said Hologic's second quarter was as expected but Tomosynthesis (Tomo) news dominated the conference call as Hologic pushed out its anticipated timeline for approval yet again. Block notes it now seems an additional six to nine months are needed before Hologic proceeds to Panel; the FDA had been willing to discuss Hologic's application in June, however, the company believes supplemental information (derived from current clinical data) is needed for approval.

Block said Hologic's two-year lead over the competition (from Tomo) is now in question. He kept his $1.14 fiscal 2009 (ending September) EPS estimate, but cut his $1.33 2010 forecast to $1.25.

Extra Space Storage Inc. (EXR)

Keybanc cuts to underweight from hold

Keybanc analyst Todd Thomas said on May 5 that Extra Space posted $0.47 first-quarter funds from operations, which was $0.02 below his forecast. Thomas noted that the company's same-store occupancy declined 200 basis points, year-over-year, and occupancy remained flat at 81.3% at quarter-end. He noted that Extra Space had little good news to announce on the capital raising front to act as a counterbalance to its weaker-than-anticipated core operations performance.

Thomas said the fundamental weakness has come on top of a recent run-up in Extra Space's share price since the end of March. He downgraded the shares to to reflect the downside surprise and the likelihood of further deterioration. He downgraded Public Storage (PSA) for similar reasons.


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