Stock Picks: MEMC, Lawson, Radian, Texas Instruments

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

MEMC Electronic Materials Inc.: Wunderlich Securities equity analyst Theodore O'Neill raised a rating on shares of MEMC Electronic Materials Inc. (WFR) to buy from hold on May 7, with a $15 price target on the stock.

In a note, O'Neill said that he raised the rating on MEMC, a maker of silicon wafers for solar modules and semiconductors, on both the stock's valuation and his confidence in rising revenue in its core business. He noted that the shares came under pressure last week after it reported fiscal 2010 first-quarter results, disappointing investors with a loss due to lower margins.

"Management said it has planned price increases in the next two quarters and was upbeat about making them stick," the analyst wrote. He said MEMC reiterated management's guidance for full year 2010 for earnings per share (EPS) of 70 cents to 80 cents. O'Neill said his expectation is that in order for MEMC to achieve its bottom-line targets, gross profit margins will have to increase to 35% by the fourth quarter of 2010. "Achieving that would likely be viewed as a major win for management credibility," he said.

O'Neill noted that the company's current market capitalization is three times its cash and that the shares are selling at a 25% discount to the company's peers. "We believe this provides solid downside protection," he wrote.

Lawson Software Inc.: Piper Jaffray equity analyst Mark Murphy lowered a rating on shares of Lawson Software Inc. (LWSN) to neutral from overweight on May 7. His price target on the shares is $7.75.

In a note, Murphy said the rating change was based on the stock's valuation. He said the maker of business-management software has "executed well" by expanding its operating margins from 6% in 2007 to 15% currently; he said the shares, up 164% since November 2008, vs. a 76% rise for the Nasdaq composite index, were within 4% of his $7.75 price target.

Murphy said he continues to think management's fiscal fourth-quarter (ending May) guidance "embeds a healthy dose of conservatism", and that a cyclical recovery has begun to benefit the business, enabling the shares to perform in line with the company's peer group.

Business Exchange

Track and share business topics across the Web.