A roundup of Wall Street research on selected stocks Friday
From Standard & Poor's Equity Research
BARRINGTON INITIATES COVERAGE OF SPARTAN MOTORS WITH OUTPERFORM
Analyst Walter Liptak says Spartan (SPAR; $10.05) can grow both sales and EPS over the long term as military production inefficiencies and parts shortages are worked out. He sees 27% sales growth in 2008, driven by military chassis operations. Liptak thinks Spartan is strategically placed to take advantage of better 2008-2009 RV chassis market. He says the company's diversification of products provides a balanced sales stream and cash flow. The analyst believes uncertainty resulting from a lack of guidance and variability of military profitability is creating a buying opportunity.
Liptak sees 61 cents 2007 EPS and 82 cents for 2008, noting his modeling is at the low end of the Street's consensus. He set a $13 price target.
JP MORGAN REMOVES FELCOR LODGING TRUST FROM FOCUS LIST, REITERATES OVERWEIGHT
Analyst Harry Curtis says Felcor's (FCH; $17.45) decline over the past several months has triggered stop-loss rules for the JP Morgan analyst focus list and is the reason he now has to remove it from the list. Curtis notes the stock initially outperformed, but has recently traded off due to the removal of a take-out premium and macro concerns around the consumer. However, he continues to view the stock as attractive and notes both the dividend yield of 8.2% and estimated 2009 enterprise value-to-EBITDA ratio of 7.9x are compelling. Curtis expects the dividend will continue to be raised. He also notes results at the completed hotels continue to be strong.
The analyst reiterated his overweight rating on Felcor shares.
CIBC WORLD DOWNGRADES HECLA MINING TO SECTOR UNDERPERFORM FROM SECTOR PERFORM
Analyst Brad Humphrey says he downgraded Hecla (HL; $12.06) given its recent share price strength. Humphrey says that although Hecla has performed very well since mid-October, its shares have continued to show strength in recent weeks despite modestly weaker silver prices and a pullback in shares prices across its peer group. As a result, the shares now trade at a premium to the group despite Hecla's flat production profiles.
The analyst believes the recent-run up in the share price represents a good opportunity for investors to take profits. He maintains an $11.75 target price.