Let’s take a quick look at analysts’ morning research notes.
- Adtran: Rating upgrade from equalweight to overweight and establishing a $45 price target. We see several tangible revenue drivers in 2011 and 2012 including share gains at Telmex, a growing opportunity at Frontier and ramping revenue from broadband stimulus contracts.
- National Fuel Gas: Initiating coverage. Expanding our diversified natural gas coverage to nine stocks. On average we project a 15% total return through 2011 for the group. Improving exploration & production portfolios in unconventional gas/oil plays, strong demand for midstream infrastructure and potential corporate announcements to unlock shareholder value.
- Massey Energy: Buy. We are lowering of fourth quarter earnings-per-share estimates to a loss of $0.31 to reflect the impact of the lower sales volumes and corresponding costs. We are also lowering our 2011 estimate to $4.76 from $4.89 to reflect flow through impact of the lost production.
- Reynolds American: Buy. We expect Reynolds to return 95% of net income generation through dividends and share repurchases. Risks include the company’s new brand strategy losing traction in the marketplace.
- BJ’s Wholesale Club: Maintain hold rating. Announcing management changes, restructuring, store rationalization and compensation recently. We’re uncertain whether an aggressive suitor would be satisfied by this move, though we’re impressed these are clearly steps in the right direction.
- Valmont: Initiating coverage with a buy rating. After a difficult 15 months, we believe Valmont’s shares are positioned to outperform the market in 2011 and beyond. Outperformance will be driven by tailwinds in the irrigation and electric transmission markets, solid execution and improved investor sentiment.
- Comerica: Sell. The fundamental outlook is good with strong capital levels that allowed it to pay off TARP but benefits from recent rate hikes are still questionable.
- Wesco: Buy. Utility spending is expected to increase by 11% this year which improves outlook for WESCO, with sales to the utility market representing about 11% of revenues.
- Centene: Buy. It maintains a solid set of assets in the growing market of Medicaid-managed care. We upgraded it from underweight to overweight and raised the price target from $25 to $32. Its current market exposure lines up well for future opportunities with state expansions in Medicaid.
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