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

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Oct. 13

Pacific Sunwear (PSUN)

FBR Capital Markets upgrades to outperform from market perform; raises price target

Pacific Sunwear of Calif. Inc. has a new CEO, better product focus and easier year-ago comparisons, so long-term investors should begin to consider the stock, said FBR Capital Markets analyst Adrienne Tennant, who upgraded the stock to outperform from market perform. She also raised her price target to $9 from $6.

Tennant said in a note that the teen retailer is better at controlling inventory and has returned to emphasizing brands as well as introducing new brands.

Still, she said the company is reversing many initiatives it started over the past 12 to 18 months, so uncertainties remain, but if sales begin improving, the stock is likely to rise as well.

Synaptics Inc. (SYNA)

Jefferies cuts to underperform from hold

Jefferies analyst Blayne Curtis downgraded Synaptics shares to underperform from hold, citing increasing competition in handsets and a shift to lower-priced products in the PC market. He said it looks as if orders for the current quarter are below what the maker of touchscreen technology for computers and smartphones is expecting.

Curtis expects fiscal first-quarter results roughly in line with his and Wall Street's expectations, but thinks second-quarter guidance will fall short. He estimates a profit of 41 cents per share on sales of $117 million for the first quarter, which ended in September. Analysts polled by Thomson Reuters are estimating earnings of 42 cents per share on sales of $116.4 million. For the current quarter, the analyst expects Synaptics to forecast revenue in the range of $130 million to $135 million, below Wall Street's expectations of $139 million.

Oct. 12

Morgan Stanley (MS)

Keefe, Bruyette & Woods maintains outperform; raises estimates, price target

Keefe, Bruyette & Woods analyst Robert Lee raised his earnings expectations for Morgan Stanley on Oct. 12 after revising revenue estimates for the bank's global wealth management joint venture, Morgan Stanley Smith Barney. Lee revised his revenue model for Smith Barney, increasing his market return assumption for the quarter and adjusting the long-term impact of the retail brokerage unit. Increased revenue from that adjustment was partially offset by a slightly lower fee rate and higher expenses, Lee wrote in a research note.

Lee now predicts Morgan Stanley will earn 20 cents per share in the third quarter, compared with a previous estimate of 11 cents per share. Lee now expects Morgan Stanley to lose 89 cents per share for the full year, compared with a previous estimate for a loss of $1.14 per share. Lee's 2010 and 2011 profit forecasts were increased. The KBW analyst now expects Morgan Stanley to earn $3.35 per share in 2010 and $3.75 per share in 2011. He had previously forecast earnings of $3.30 per share in 2010 and $3.70 per share in 2011. Lee also raised his price target to $36 from $34.

Visa (V)

MasterCard (MC)

Creidt Suisse upgrades both to outperform from neutral; increases price target on both

Increased use of credit and debit cards should translate into improved revenue for payment processors MasterCard and Visa, Credit Suisse analyst Moshe Orenbuch said Oct. 12 as he lifted his ratings on both of the stocks. Orenbuch also increased his price target on MasterCard to $255 from $210. He raised his price target on Visa to $84 from $70.

Orenbuch increased his 2010 earnings estimate for MasterCard by 30 cents per share to $12.65 per share. He established a 2011 earnings estimate of $15 per share. He predicts Visa will earn $3.50 per share in 2010. He established a fiscal 2011 earnings estimate of $4.15 per share.

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