Picks of the Week: Google, Goldman, Morgan Stanley, Intel

Wall Street analysts give their buy, sell, or hold views on 10 stocks in the news this week

Highlights of analyst stock opinions issued the week of Oct. 12-16:

Oct. 16

Google (GOOG)

Goldman Sachs maintains buy; raises estimates, price target

Goldman analyst James Mitchell said on Oct. 16 that Google reported better third-quarter revenue, margins, headcount, and capital spending figures than he expected in its earnings release after the close of trading Oct. 15. Mitchell noted that the company's reported earnings of $6.06 per share (which excluded stock buyback expense) beat his $5.61 estimate; the company's EBITDA margin was 150 basis points above his estimate on lower-than-expected R&D spending.

Mitchell raised his $22.94 2009 earnings estimate (excluding employee stock option expense) to $23.61 per share, his $25.55 per share 2010 forecast to $27.86 per share, and his $585 price target to $635.

Bank of America (BAC)

Standard & Poor's Equity Research maintains strong buy

S&P Equity analyst Stuart Plesser said on Oct. 16 that BofA posted a third-quarter operating loss of 26 cents per share vs. earnings of 15 per share one year earlier, 16 cents wider than his estimate. Plesser noted that BofA's results included roughly $2.6 billion of writedowns largely due to improvement in its credit spreads. Loan-loss provisions remained elevated in the third quarter, said Plesser, but improved from second-quarter levels, signaling that credit conditions, although tough, are improving.

"Capital levels are strong and we continue to view the next major catalyst for these shares as the possible partial payback of TARP by year end," said the analyst in an Oct. 16 note.

Oct. 15

Goldman Sachs (GS)

Standard & Poor's Equity Research keeps buy; raises estimates, price target

S&P Equity analyst Matthew Albrecht said on Oct. 15 that Goldman's third-quarter earnings of $5.25 per share, vs. $1.81 earnings per share one year earlier, beat his $4.01 estimate. Investment banking revenues fell vs. the second quarter, but the firm saw its backlog of deals increase significantly, said Albrecht. Revenues from trading declined as the company took on less risk across most asset classes, while principal investments benefited from fewer real estate related writedowns.

The analyst raised his 2009 earnings estimate by $1.83 to $18.95 per share and lifted his target price by $11 to $216.

Lazard Ltd. (LAZ)

Oppenheimer downgrades to perform from outperform

Oppenheimer analyst Chris Kotowski said on Oct. 15 that Lazard announced after the close of trading Oct. 14 that CEO Bruce Wasserstein died unexpectedly. Wasserstein will be replaced by Vice Chairman Steven Golub as interim CEO.

While Kotowski stressed that Lazard has a broad based business that isn't overly dependent on Wasserstein personally, the analyst didn't change his $45 price target, but downgraded the shares. He noted that CEO transitions typically involve a period of disruption.

Oct. 14

Intel (INTC)

Needham rates buy; raises estimates, price target

Needham analyst Y. Edwin Mok said on Oct. 14 that Intel once again beat high expectations in its earnings report released after the close of trading Oct. 13, with its strong third-quarter results and higher guidance. Mok said the company is benefiting from strong demand for retail notebooks and Nehalem servers. Beyond the near-term, Mok believes the adoption of Microsoft's new Windows 7 operating system will lead to further revenue growth and substantially higher EPS for Intel.

The analyst raised his non-GAAP earnings forecast for 2009 from 88 cents to $1.06, and his 2010 view from $1.30 to $1.65 on higher revenue and margin estimates. He raised his price target to $28.

Harley-Davidson (HOG)

Wells Fargo upgrades to outperform from market perform; raises estimates, valuation range

Wells Fargo analyst Timothy Conder said on Oct. 14 that he upgraded Harley-Davidson's stock on his belief that investors have yet to fully appreciate the likely year-end 2009 supply/demand gap that should allow for low single-digits 2010-11 shipment growth and stabilizing used bike prices in the first half of 2010.

The analyst also sees a likely resumption of Harley-Davidson's share repurchase program with excess free cash flow. He raised his $1.32 2010 earnings per share estimate to $1.44 and sets a $2.12 2011 estimate. He raised his $19-$21 valuation range to $30-$32.

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