Markets & Finance

Analyst Picks and Pans: ABT, CTV, AAP, AZO, DPS, PBG, CCE, PAS


What Wall Street analysts are saying about selected stocks in the news Thursday

Abbott Laboratories (ABT)

Citi Investment Research upgrades to hold from sell

Citi Investment Research Matthew Dodds on Apr. 1 said shares of the drug developer are well priced following a 15% decline over the past six weeks. Health care companies have taken a hit since Feb. 25 due to concerns over the Obama Administration's health care budget reform proposals.

Growth for Abbott's Humira, which treats rheumatoid arthritis, psoriatic arthritis and Crohn's disease, is slowing amid the recession, Dodd said. Abbott is increasingly reliant on Humira, which contributed 30 percent of 2008 pretax profit, according to Dodd. He still sees Humira's contribution to profit rising as the drug makes gains as a treatment for psoriasis.

Two other drugs, Kaletra and Depakote, together with Humira made up 45% of the company's $16.3 billion in pharmaceutical sales in 2008. Depakote, which treats seizure disorders, is beginning to see from competition from generics, but Kaletra, an anti-HIV drug, is better protected from generic competition in the U.S. and European Union countries, said Dodds.

"Abbott has a better 5-year outlook than its peer group as Depakote is the last major generic hit over this time frame," Dodds said. He maintained his $48 price target on the stock.

Commscope (CTV)

R.W. Baird upgrades to outperform from neutral

Baird analyst Kenneth Muth said on Apr. 2 he believes fundamentals should bottom in the first quarter, and ramp strongly in the second as the wireless capital spending outlook has improved. Muth noted recent checks suggest that wireless capex trends accelerated in March, and the outlook for the company's wireless business has improved for the rest of 2009. He said that while robust spending in China does not come as a surprise, the U.S. is also performing better than expected, especially at T-Mobile USA. Also, Muth believes other geographies are at least tracking to expectations.

Muth raised his $1.73 2009 earnings per share estimate to $2.30, and his $10 price target to $19.

Advance Auto Parts Inc. (AAP)

AutoZone Inc. (AZO)

Citi Investment Research downgrades both to hold from buy

Citi Investment Research analyst Kate McShane noted on Apr. 1 that shares of both companies have enjoyed a strong rally in recent months, but that it may come to end as new car sales improve.

Auto parts retailers have done well recently due to the decline in new vehicle sales, as car owners opt to repair their existing cars rather than buy new ones. Shares of AutoZone have climbed about 20% since the start of the year. Shares of Advanced Auto Parts have jumped 25%.

However, March sales figures released by automakers on Wednesday indicated that sales may have hit bottom.

McShane also said the "cash for clunkers" legislation could also hurt parts retailers, saying it might discourage repair shop business. She left her price targets unchanged, with AutoZone at $183 and Advanced Auto Parts at $45.

Dr Pepper Snapple Group (DPS)

Pepsi Bottling Group (PBG)

Deutsche Bank upgrades both to buy from hold

Coca-Cola Enterprises (CCE)

Deutsche Bank keeps hold

PepsiAmericas (PAS)

Deutsche Bank keeps buy

Deutsche Bank's Marc Greenberg said Dr Pepper's performance is stronger than its competitors because of steady pricing and market share gains. The company's high-margin concentrates segment is improving as well, he added. Greenberg raised his share price target on Dr Pepper to $22 from $20, implying shares have room to rise 26% from the Apr. 1 closing price of $17.40.

The analyst expects that Pepsi Bottling Group will benefit from Pepsi's promotional investment and lower commodity costs. He raised his price target by $3 to $28, implying upside of 24%.

Greenberg raised his price target by $3 to $16 for Coca-Cola Enterprises Inc., but kept his hold rating, saying that the company hasn't been able to stabilize volume, nor has it increased promotions.

Greenberg kept a buy rating and $24 price target on PepsiAmericas Inc., and said U.S. operations are improving toward the key summer season. PepsiAmericas will also benefit from PepsiCo Inc.'s (PEP) higher promotions by boosting volume and margins, he added.


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