Picks of the Week: Berkshire, Starbucks, Cisco, MasterCard

Wall Street analysts give their buy, sell, or hold views on various stocks in the news this week

Highlights of analyst stock opinions issued the week of Nov. 2-6:

Nov. 6

Starbucks (SBUX)

Jefferies & Co. reaffirms hold; raises price target

Starbucks said its fourth-quarter profit climbed and it lifted its fiscal 2010 adjusted earnings guidance due to improving traffic in its stores. After the close of trading Nov. 5, the company said customers increased their spending and more people visited its coffee shops in the fourth quarter, although there were fewer locations to frequent. The chain's cost-cutting measures were credited with giving its earnings a boost, as the company spent the year slashing expenses, laying off workers and reinventing the food it sells.

Starbucks adjusted profit of 24 cents per share beat the 21-cents-per share estimate of analysts polled by Thomson Reuters. Analysts' estimates typically exclude one-time items. Starbucks also raised its adjusted profit outlook for next year. It now expects earnings per share excluding one-time items to climb between 15% and 20%. The company previously expected earnings per share to grow 13% to 18%.

Jefferies & Co.'s Jeff Farmer said in a Nov. 6 client note that the quarterly results also topped his earnings forecast of 22 cents per share. The analyst said Starbucks' cost-cutting efforts have been better than expected, as it finished 2009 with $580 million in cost savings compared with a prior forecast for savings of $400 million. Farmer increased his price target on the shares to $22 from $21.

Fannie Mae (FNM)

Standard & Poor's Equity Research maintains hold; widens loss forecast

S&P equity analyst Rafay Khalid said on Nov. 6 that the mortgage giant's third-quarter loss per share of $3.47, vs. a $12.97 loss per share one year earlier, was wider than his $3.24 loss estimate, reflecting higher-than-expected loss provisions. Khalid expects Fannie to continue to suffer losses through 2010, necessitating further investments by the U.S. Treasury. He sees Fannie "facing uncertainties regarding its role in the housing market."

Khalid widened his 2009 loss per share forecast by 76 cents to a $14.05 loss and his 2010 loss forecast by $5.44 to a $14.93 loss. However, he kept his 12-month target price of $1.50.

Nov. 5

Cisco Systems (CSCO)

UBS Securities maintains neutral; raises estimates, price target

UBS analyst Nikos Theodosopoulos said on Nov. 5 that Cisco's first-quarter results, released after the close of trading Nov. 4, beat expectations across the board. He noted that the company's book-to-bill ratio was above 1. U.S. enterprise orders were up sharply (+10%). Public sector orders were strong due to seasonality and broad government spending strength.

"We believe Cisco is likely to remain aggressive on the acquisition/partnership front," wrote Theodosopoulos in a note to investors, noting that the company recently announced over $6 billion in merger deals and a new cloud computing focused joint venture with EMC and VMware.

Theodosopoulos raised estimates on Cisco based on broadly improving fundamentals and Cisco's strong quarterly results: for fiscal 2010, he raised his sales estimate to $38.2 billion and his earnings per share (excluding options) view to $1.45, and for fiscal 2011, he raised his respective forecasts to $43.1 billion and $1.63. He also raised his price target to $25.

CVS Caremark (CVS)

Wells Fargo keeps outperform

Wells Fargo analyst Matt Perry believes the negative CVS share price reaction on Nov.

Business Exchange

Track and share business topics across the Web.