Analyst Picks & Pans
Stock Picks: Berkshire Hathaway, Burlington Northern
S&P Equity Research analyst Catherine Seifert said she has a positive view on Berkshire Hathaway's planned acquisition of the 77.4% of Burlington Northern Santa Fe it does not already own for $100 in cash/stock, making this $44 billion deal the largest in its history.
"We view the purchase price as ample and not the "deep value" we would have liked to see," Seifert wrote in a note Tuesday. "We also note this deal may shift the business mix away from its current insurance based model."
Seifert raised her 2009 operating EPS estimate $62 to $5496 amid mild third quarter claim trends we foresee when Berkshire reports third quarter results on Nov. 6. She kept her target price at $105,000.
S&P analyst Kevin Kirkeby also kept a hold recommendation on shares of Burlington Northern Santa Fe on the deal news. "We believe BRK.A's move looks beyond near-term regulatory and economic uncertainty and makes a strong (and positive) statement as to the long-term role of railroads in the U.S. economy," he wrote in a note Tuesday.
The proposed transaction, subject to shareholder and regulatory approval, values BNI near the top end of its historical range on both asset- and earnings-based metrics, Kirkeby said. He raised his target price to $100 from $81, which approximates the proposed deal value.
Altra Holdings (AIMC) Baird upgrades to outperform from neutral
Baird analyst Michael Schneider said Altra Holdings' $0.06 third quarter adjusted EPS beat his $0.01 loss estimate. He said sales and margins at the mechanical power transmission and motion control products maker also beat forecasts, reports S&P MarketScope.
Schneider says these results signal an inflection point arrived earlier than anticipated and should close the stock's steep valuation discount to its peers. He notes book-to-bill ratio finally turned positive; distributor destocking is nearly complete; quotes in the company's later-cycle mining and energy markets have increased.
Thus, Schneider says he has greater confidence in his forecasted acceleration for revenue and margins. He maintained a $12 price target for the stock. He said he has EPS estimates under review.
Carmike Cinemas (CKEC) Merriman downgrades to neutral from buy
Merriman analyst Eric Wold said Carmike Cinemas $0.26 third quarter loss from continuing operations (before impairment charges) came in below his $0.17 EPS estimate. He noted higher operating costs impacted results, including new theater openings, minimum wage hikes, higher repairs/maintenance, and 3D equipment service charges.
Given the 850% jump in Carmike Cinemas shares since March, the potential for elevated expense levels to linger longer than expected, and a difficult economy that may hamper price increase pass-through, Wold believes it may be prudent to wait for better visibility on margin improvement and/or a more attractive entry point.