Markets & Finance

S&P Picks and Pans: IBM, BlackRock, Bank of New York Mellon, Analog Devices, Abbott Labs


Analysts' opinions on stocks in the news Wednesday

From Standard & Poor's Equity ResearchS&P REITERATES STRONG BUY OPINION ON SHARES OF IBM (IBM; 81.98):

IBM reports fourth quarter EPS of $3.28, vs. $2.80, which tops our estimate of $3.07. Revenue decreased 6% from a year ago, aided by strength in services and software segments, but hurt by hardware segment sales and currency effects. A 300 basis-point widening of gross margin helped make for what we view as a strong quarter, despite a mixed picture on revenue. Lower tax rates, continuing share buybacks, and healthy services backlog at $117 billion add to attractiveness, in our view. We are maintaining our $9.25 EPS estimate for 2009 and our 12-month target price of $120. -T. Smith-CFA

S&P KEEPS BUY RECOMMENDATION ON SHARES OF BLACKROCK (BLK; 100.95):

Fourth quarter adjusted EPS of $0.68, vs. $2.52, is short of our $1.37 estimate. Assets under management fell 4.4% sequentially from third quarter as net client inflows were offset by market declines, though we think BLK's asset trends are more positive than peers. Revenues were pressured by an unfavorable asset mix, and investment losses caused the EPS shortfall. We are encouraged by operating cost controls, however, and we think BLK is gaining marketshare. We are lowering our 2009 EPS estimate to $6.95 from $7.41 and trimming our target price by $40 to $130 based on a premium multiple to peers. -M. Albrecht

S&P MAINTAINS HOLD OPINION ON SHARES OF BANK OF NEW YORK MELLON (BK; 19.00):

Before merger and restructuring costs, BK posts fourth quarter operating EPS of $0.19, vs. $0.67, $0.53 below our estimate. Results were hurt by a $1.2 billion securities charge ($0.65 a share). Revenue from BK's custodial business increased sequentially, helped by strong net interest revenue offset by lower fees. Tangible capital totaled 3.8%, but further securities writedowns could reduce this figure. We are lowering our 2009 EPS estimate by $0.16 to $2.80 to account for additional writedowns. We are also cutting our target price by $10 to $26, a below-historical 9.3 times our 2009 EPS estimate. -S. Plesser

S&P MAINTAINS HOLD OPINION ON SHARES OF ANALOG DEVICES (ADI; 18.77):

ADI now projects January-quarter sales to fall 25%-30%, worse than previous guidance of a 20% decline, reflecting weaker end demand and inventory tightening throughout the supply chain. The company also lowered its EPS forecast to $0.15-$0.17 from $0.22-$0.23. We are cutting our January-quarter EPS estimate by $0.11 to $0.12 and fiscal year 2009's (October) by $1.00 to $0.20 on our reduced sales and margin assumptions due to our view of continuing weakness through calendar year third quarter. We are also cutting our 12-month target price by $4 to $21. However, we think the share price largely reflects weak earnings expectations. -C. Montevirgen

S&P REITERATES STRONG BUY OPINION ON SHARES OF ABBOTT LABORATORIES (ABT; 50.12):

Fourth quarter operating EPS rose 14% to $1.06, matching our estimate. Despite a 2.5% forex hit, sales rose 10%. Key drivers were Humira (sales +42%), Tricor (+16%), nutritionals (+11%), and launch of Xience, now the top-selling drug-eluting stent in the U.S. Gross margin was 57.3%, vs. 55.9%. Despite generic erosion in Depakote, and forecasted 5% forex headwind, we see 7%-8% sales growth for 2009, with EPS rising 11%. We believe ABT is a compelling value at a discount-to-peers PEG of about 1.0 based on our $3.68 estimate for 2009. We keep our target price of $65. Dividend yield is 2.9%. -H. Saftlas


Race, Class, and the Future of Ferguson
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

Sponsored Financial Commentaries

Sponsored Links

Buy a link now!

 
blog comments powered by Disqus