From Standard & Poor's Equity ResearchBERNSTEIN RAISES ESTIMATE, RATES IBM OUTPERFORM
Bernstein analyst Toni Sacconaghi says while IBM's (IBM) hardware revenues were notably weak, revenue by category was largely in line with his forecast; $3.28 EPS benefited from lower tax rate, lower-than-expected share count, higher intellectual property income; adjusting for these, EPS was $3.04, vs. his, consensus $3.03.
Sacconaghi believes 2009 guidance of at least $9.20 is conservative, and raises his $8.75 estimate to $9.35. He notes IBM should benefit nearly $1/share or more year-over-year in 2009 from workforce restructuring and lower share count alone.
He says IBM is solid defensive name. He has a $110 price target on the stock.
CITIGROUP REITERATES BUY ON BANK OF NY MELLON
Citigroup analyst Greg Ketron says Bank of New York Mellon's (BK) core EPS was in line with his estimate. He notes total fees fell less than 1% and had only a modest deterioration in credit.
Ketron says the bank is controlling expenses. He notes regulatory capital ratios improved on TARP capital infusion.
He sees BK as well positioned to take advantage of long-term trends expected to support revenue growth for Trust & Processing over the next several years. He believes diversification and continued merger-related benefits should allow for revenue and EPS growth in 2009-2010.
He still sees $2.90 2009 EPS. He has a $33 target.
CITIGROUP UPGRADES HARLEY-DAVIDSON TO HOLD FROM SELL
Citigroup analyst Gregory Badishkanian says Harley-Davidson's (HOG) business is bad, but expectations are very low. He notes, at yesterday's close, HOG was down 70% from Sept. 4, vs. a 35% drop for the S&P 500.
Badishkanian says while HOG still faces challenges, including a tough macro environment, negative operating leverage in 2009, and financing issues at HDFS, expectations somewhat incorporate these problems. He also says he's seeing slightly better-than-expected retail sales trends in the fourth quarter.
He cuts $3.02 2008 EPS view to $2.98, $2.85 2009 EPS to $1.60, and $18 target to $13. He removes HOG from Top Picks Live list.