Analyst Picks & Pans November 11, 2009, 9:36AM EST

Stock Picks: Adobe, Logitech

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Hewitt Associates (HEW)

Deutsche Bank upgrades to buy from hold; raises price target

Hewitt Associates is adding new contracts and its consulting revenue should get a boost as corporate spending recovers, Deutsche Bank analyst Paul Ginocchio said Nov. 11 as he upgraded the human resources consulting and outsourcing company. Revenue will increase in the coming quarters, accelerating profit growth, as the consulting business improves alongside the economy, said Ginocchio in a note to investors.

On Nov. 10, the Lincolnshire, Ill., consultancy said its fourth-quarter profit more than doubled on lower operating costs, and offered profit guidance that beat Wall Street expectations. "While we are seeing some positive signs in terms of customer demand, our guidance is not dependent on a meaningful recovery," said Russ Fradin, chairman and CEO, on Nov. 10.

Meanwhile, Hewitt is adding new clients in its HR outsourcing division, despite losing accounts to bankruptcy and mergers. That should lift the stock, Ginocchio said. He boosted his price target by $20 to $55.

Synnex (SNX)

Kaufman Bros. maintains buy

Kaufman analyst Shaw Wu said in a Nov. 11 note to investors that with about three weeks left in Synnex's November quarter, he believes the business process services company is on track to hit the upper end of its guidance range of $2.025 billion-$2.125 billion in revenue and 72 cents to 75 cents in EPS, vs. Kaufman's extimates of $2.1 billion and 76 cents and the Wall Street consensus view of $2.1 billion and 75 cents, respectively).

Wu said his sources indicate strength in several areas including PC notebooks, servers, printers, processors and HDDs where the company has strong exposure. Wu believes there is opportunity for the company to show some margin leverage based on cost discipline and a continued mix shift toward global services. He believes the company is well positioned to capitalize with its low-cost business model and expanding set of offerings.

Wu finds Synnex's valuation attractive, and sees upside potential in the share price to $34 based on what he thinks is a "reasonable and conservative" multiple of 12 times his calendar 2010 EPS estimate of $2.85.