Analyst Picks and Pans

Analyst Picks and Pans: Manitowoc, NetApp, DTS


Manitowoc Co. (MTW)

Deutsche Bank upgrades to buy from hold

Deutsche Bank analyst Nigel Coe upgraded heavy equipment maker Manitowoc Co. late Oct. 4 on the strength of its foodservice equipment business.

Manitowoc's foodservice division is "likely to dominate" over the next year or two, accounting for about 45 percent of revenue and two-thirds of earnings before income taxes, depreciation and amortization in 2010, Coe said in a client note.

"While the convenience restaurant and lodging segments have not been immune through this downturn, with revenues down low single-digit and margins expanding next year ... we see Manitowoc's foodservice segment as a critical earnings anchor," Coe said.

NetApp Inc. (NTAP)

RBC Capital upgrades to outperform from sector perform; raises price target

RBC Capital analyst Amit Daryanani said on OCt. 5 he believes NetApp's second quarter is progressing ahead of Wall Street expectations, and suspects this positive execution will flow through subsequent quarters.

Daryanani believes key suppliers to NetApp (like Jabil and Xyratex) had better-than-expected shipments for their Aug quarters, and believes these suppliers expect NetApp to remain strong through at least their November quarters. The analyst expects NetApp to exude a positive business tone at its upcoming analyst day on Oct 8.

Daryanani raises the $1.21 fiscal 2010 (ending April) operating earnings per share estimate to $1.27, and the $1.41 forecast for fiscal 2011 to $1.52. Daryanani also raised the $26 price target to $33.

DTS Inc. (DTSI)

Deutsche Bank upgrades to buy from hold; raises price target

DTS Inc. is set for a period of "hyper-growth," Deutsche Bank analyst Brian Thackray said Oct. 5, pointing out improving demand for Blu-ray DVD players.

Thackray said his checks with more than 500 retailers show Blu-ray technology is finally catching on as prices come down, a trend likely to boost sales for DTS. The Agoura Hills, Calif., company makes equipment for audio systems used in DVD players, computers and other electronics.

In addition to upgrading the shares, Thackray raised his price target to $32 from $28.

In a note to investors, Thackray said the average cost of a low-end Blu-ray player is down 53% from the year before at about $130.

"Prices are now clearly in the sweet spot," he said. "Our work shows that demand increases significantly for Blu-ray players below $150 and we are starting to see the increased demand over the last few weeks."

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