Markets & Finance

S&P Picks and Pans: Dell, AIG, Shanda, ValueClick


Analysts' opinions on stocks in the news Wednesday

From Standard & Poor's Equity ResearchS&P REITERATES BUY OPINION ON SHARES OF DELL (DELL; 10.07):

DELL announces the global reorganization of its business around the three major customer segments of large enterprise, public sector, and small and medium businesses. The company is also replacing its Chief Marketing Officer and President, Global Operations. We believe that DELL's multi-year effort to move into new territories and offer more variety in products and services will be slowed, but not derailed, by weak demand that we project for the next few quarters. We maintain our target price of $13, based on a p-e ratio of 9.4 times our 12-month forward EPS estimate of $1.39. -T. Smith, R. Khalid

S&P MAINTAINS HOLD OPINION ON SHARES OF AIG (AIG; 1.52):

An unconfirmed report in the Financial Times says AIG is preparing to seek approval from the Federal Reserve to relax terms for its asset sales. Specifically, AIG is reportedly seeking to enable bidders to use either installment payments or company shares to purchase the assets rather than current terms, which require 90% cash. If the Fed approves this amendment, we think AIG could garner a higher value for its assets on increased competition and the financial ability of bidders to pay a higher amount. This in turn should better enable AIG to pay back its loan to the government. -C. Seifert, S. Plesser

S&P REITERATES BUY OPINION ON ADSS OF SHANDA INTERACTIVE ENTERTAINMENT (SNDA; 30.75):

SNDA announces that it has increased its share repurchase authorization to $300 million from $200 million. This amount includes $175 million in an accelerated buyback that was announced in September. SNDA had some $588 million in cash and short-term investments as of the third quarter, and we estimate repurchase potential of up to 9% of the outstanding diluted ADSs from October until the program's conclusion. SNDA repurchased 3.3 million ADSs in September alone, and has not disclosed further details on actions since then. We would be surprised if the company did not buy back a considerable number of ADSs in the fourth quarter. -S. Kessler

S&P REITERATES STRONG SELL OPINION ON SHARES OF VALUECLICK (VCLK; 6.56):

Despite a year-to-date decline of 70%, VCLK has risen 40% since Nov. 20. We see fundamental challenges across its businesses, especially with the media, comparison shopping and affiliate marketing units accounting for nearly all of third quarter revenues. While the valuation may seem attractive with a p-e of 11 times our 2009 EPS view, we see limited near/intermediate-term growth and notable risks. Despite ample buyback authorization and a history of active repurchases, we think such actions have been materially curtailed given the economic backdrop, auction-rate securities exposure, and other obligations. -S. Kessler


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