Markets & Finance

Analyst Actions: Goldman Sachs, Potash, STEC


From Standard & Poor's Equity ResearchLADENBURG UPGRADES GOLDMAN SACHS TO NEUTRAL FROM SELL

Ladenburg analyst Richard Bove says Goldman Sachs' (GS) $4.97 fourth quarter loss is primarily due to charges taken against holdings in real estate, private equity, and a Chinese bank. He notes loss could have been much higher except for a reversal in accruals for bonuses.

Bove says operating businesses did better than he thought; equity business was strong and it did much better in advisory and underwriting than estimated.

He says if one assumes charge-offs will dissipate, the company's fortunes will improve given stimulus being provided to economy, outlook much better than fourth quarter results would imply. He raises his $70 price target to $77.

MERRILL UPGRADES POTASH, MOSAIC, INTREPID POTASH, TERRA TO BUY FROM UNDERPERFORM

Merrill Lynch analyst Steve Byrne upgrades Potash (POT), Mosaic (MOS), Intrepid Potash (IPI), and Terra Industries (TRA) to buy from underperform. He says fertilizer fundamentals are nearing a bottom, given nitrogen and phosphate prices have already plunged through breakeven margins for marginal producers, triggering significant shuttered global capacity.

Byrne says the significant deferral in fertilizer applications that occurred this fall can not repeat in spring if crops are to be planted. He thinks under normal debt market conditions, North American fertilizer producers could be attractive acquisition candidates.

He notes that the four companies have positive net cash positions.

NEEDHAM CUTS ESTIMATES, TARGET FOR STEC

Needham analyst Richard Kugele says he's disappointed that STEC's legacy business, and its close ties to networking and the weak demand dynamics within that space, are masking solid progress within the solid-state drive (SSD) division.

Kugele cuts $0.13 fourth quarter EPS view to $0.09, $0.38 for 2008 to $0.35, and $0.69 for 2009 to $0.49. He lowers $15 target price to $10.

But the analyst maintains a strong buy, noting this is based entirely on the SSD ramp that's continuing unabated and the driving force towards STEC's ultimate acquisition.


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