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Let’s take a look at analyst morning notes…Google:
- CITI DOWNGRADES TO HOLD AFTER EARNINGS: “$6.54B in Net Revenue was above our/Street Revenue estimates of $6.31B/$6.32B, but above/below our/Street EPS of $7.90/$8.13. 27% Y/Y Net Revenue growth suggests positive/material impact of Mobile/YouTube/Display as well as healthy core PC Search biz. But 45% Y/Y Opex growth with limited management disclosure suggests lack of discipline in a growth/competitive environment that simply isn’t as open-ended as it was for GOOG prior to the Recession. Hence the Downgrade.”
- WELLS FARGO CUTS ESTIMATES ” GOOG posted mixed results, with better-than-expected revenue growth, offset by lower operating margins and EPS than Street expectations due to aggressive hiring in the quarter. On the positive side, the core search business is in a major product cycle with advertising revenues increasing 2% qtr/qtr and 28% yr/yr. While the stock will likely be weak following the operating margin miss, we are confident that Google’s investments in display, mobile and video should pay off. Allowing for higher revenue, offset by increased opex, our FY11 EPS estimate declines to $33.50 from $33.90 and our FY12 EPS estimate declines to $39.00 from $39.16. We maintain our valuation range of $750-770 which is based on a PE of 19x-20x our FY12 EPS estimate of $39.00.”
- OPPENHEIMR LOWERS TARGET: “Following much weaker than expected 1Q margins, we are lowering our price target to $650 from $715, but maintaining our Outperform given implied 20% upside potential from the after-hours trading level. While revenues increased 29% y/y, 3% above Street, we believe investors will focus on the 60% y/y increase in expenses. Drivers were a 27% headcount increase, 10% wage increase, higher marketing to drive Chrome and search spending, legal and real estate expenses and 1Q benefit accruals.”
- JPMORGAN RAISES ESTIMATES: “For the March quarter, our revised revenue and EPS estimates are $24.42 billion and $5.39 versus $23.83 billion and $5.21 previously. The Street consensus is at $23.26 billion and $5.38. For F2011, our revised revenue and EPS estimates are $104.04 billion and $22.99 versus $101.49 billion and $22.73 previously. The Street consensus is at $100.73 billion and $22.99NASDAQ 100 rebalancing should not have any lasting impact.
- MORGAN STANLEY IS NERVOUS: “Supervalu reported a better-than-expected 4Q as the company reined in ineffective promotions from 3Q, driving a better gross margin. As valuation has been depressed and sentiment very bearish, we believe short covering drove the 17% move in the stock yesterday. With traffic running -4.6%, we do not believe Supervalu has turned the corner and we see risk in the company’s F2012 guidance which assumes both comp recovery and flat gross margins. We believe margins could disappoint as food inflation is driving up costs just as Supervalu is working to bring down prices. Further, we believe it is very difficult for grocers to reverse negative traffic trends. If the company continues to comp in the -5% range, negative operating leverage could also result in a margin disappointment. We estimate F2012 EPS at $1.15 vs. the company”
- MORGAN STANLEY PREDICTS AN EARNINGS BEAT: “We believe the share price will rise in absolute terms over the next 60 days. This is because of an earnings release. We expect the stock to trade well through earnings season on: (1) CSX’s recent pullback has made valuation more attractive into 1Q11 earnings (CSX is at ~14x TMF cons. est. or midpt. of its historical range) and (2) Per our recently published preview, we believe CSX is likely to beat 1Q11 consensus should consensus remain unchanged and offer favourable commentary on its earnings call next week about export coal, pricing trends and margin improvements. Thus, we also reiterate our long-term OW on CSX. CSX reports on 4/19/11 and our 1Q11 MS est. of $1.14 compares favourably to consensus of $1.04. We estimate that there is about an 80%+ or “highly likely” probability for the scenario.”
- GOLDMAN SACHS UPGRADES: “Channel checks also point to stronger used bike prices, suggesting overhang from high levels of used inventory may be abating. Our Sell rating was underpinned by expectation of weak earnings performance on the back of poor end demand outlook, but this was more than offset by a stronger pricing environment and better cost control by the new management. Since adding HOG to the Sell List on December 17, 2009, HOG shares have risen 56.9% vs. 19.9% for the S&P 500. Over the last 12 months the shares are up 22.9% vs. up 9.8% for the S&P 500.”
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