Good morning, let’s take a look at some notable analyst comments today.
- GOLDMAN: Tenet (THC) filed a lawsuit against Community Health (CYH) alleging CYH has been “systematically overbilling Medicare and likely other payers by converting emergency room visits to medically unnecessary inpatient admissions.” As part of its argument, THC alleges that CYH use of “observation status” is “less than half the national average for US hospitals” and sees “no legitimate explanation for the difference.” THC asserts “CHS may well be subject to liability and damages of well over $1 billion for its practices during the 2006-2009 period.” Finally, THC argues its allegations have “implications for the CYH $6 proposal to acquire Tenet” in that CYH stock “is worth less than stated” and the company’s “ability to finance the cash portion of the offer may be impaired.” The litigation seeks to compel CYH to disclose the “risks and financial impact of its admissions strategy.” CYH responded that the THC allegations “are completely without merit” and an attempt to “distract shareholders from CYH’s pending offer.” We have not yet had the opportunity to speak directly with CYH or THC management. We remain Not Rated on both CYH and THC.
- UBS: Coca-Cola remains rated Buy by analyst Kaumil Gajrawala with a $75 price target. The company continues to out-execute its consumer staples peers. It is demonstrating solid volume growth (including emerging markets) and is relatively insulated from rising input costs. However, with KO shares now trading at 17.4x 2011E EPS, a significant premium to its peers, we believe this is well recognised by investors.
- CITI: Raising Earnings Estimates — We have modestly raised our Macau earnings estimates for 2011/12 to reflect current GGR and market share trends. Our estimates still generally remain below consensus due primarily to our more conservative 25% YoY total market GGR growth estimate in 2011 (vs consensus closer to +30%).
- CITI’S MARK MAHANEY: Our Top 3 Longs: – Consistent with our 2011 Playbook: Top 3 ‘Net Large Cap Picks remain: 1. GOOG – arguably the broadest ‘Net play on ’11 Growth Drivers, attractive Relative & Intrinsic Valuation, consistently high levels of Product Innovation & probable Market Share Gains in Display Advertising; 2. PCLN – relatively low risk to Street Estimates, with a strong ’11 Fundamentals Outlook, probable global hotel Market Share Gains & attractive PEG valuation; & 3. AMZN – very high marks for Market Share Gains and Product Innovation (e.g. Kindle, Subscribe & Save), attractive PEG valuation, a strong ’11 Fundamentals Outlook & an intriguing play off of ’11 Growth Drivers.
- STERNE AGEE: Concerned With Rising Component Costs. We are concerned with rising component pricing but believe it will likely impact its June quarter guidance more than the March quarter… Lowering FY11 EPS but Keeping Revenue and FY12 Intact. For the June quarter, our new EPS estimate is $5.35 (from $5.63 in EPS) but we are leaving our revenue intact at $24.2 billion. We remain well above consensus estimates at $23.8 billion and $5.29 in EPS.
- JPMORGAN ” iPhone’s $9 Billion-plus CDMA Opportunity Is Built on more than Verizon – We believe that CDMA market penetration represents a multi-billion dollar revenue opportunity for Apple. In 2012, we estimate that Apple could capture $6.0 billion in revenues from the Verizon opportunity (mostly in our model) and $3.0 billion from non-Verizon CDMA penetration (not in our model).”
- JPMORGAN: Solid 1Q rail EPS and outlooks appear likely, quarter preview and tweaks to estimates, raising ests for CNI, CSX, KSU, UNP, lowering ests for NSC – Strong 1Q results appear likely for CSX, KSU, and UNP. CSX’s 13-week reporting method (vs. the other rails on a 3-month quarter basis) provides an easy comparison, and volume growth in 1Q11 of 7.8% y/y came in better than we previously forecast. In addition CSX gave no indication of concern regarding weather or fuel headwinds when it presented at our conferenc