Let’s take a look at analyst morning notes.
GENERAL MOTORS (GM):
- MORGAN STANLEY: Uninspiring. GM results were not strong enough to trigger consensus upgrades, leaving investors short an oil future for the next few months. Besides the positive cash flow and pension development, 4Q10 provided no incremental reason to buy the stock, in our view.
- CITI: Buy. GM did not miss. The market got caught up in a number of issues that culminated in a messy day for the stock. GM met is Q4 EBIT expectation in each region, 2011 outlook commentary was in-line, management sees no major change to its material cost outlook and commentary around 2011 inventory and price discipline should be comforting.
FIRST SOLAR (FSLR):
- MORGAN STANLEY: Mixed. 4Q10 results and 2011 guidance contained few surprises. The company completed its production line upgrade process and finally showed improvement in conversion efficiency for the first time in four years. However, the low 4Q10 EPS beat and 2011 EPS raise were primarily due to lower-than-expected tax rates, which we believe the market will not give the company credit for.
- CITI: Wait for 2012. We love the flexibility of this model and costs appear back on-track. The beauty of this model can be difficult to see but in harder times this story really shines as it ought to be able to put up a big EPS year on the back of its robust systems pipeline.
- COWEN: Outperform. Mix shift from systems to modules reflects strong demand.
- DEUTSCHE BANK: Sell this stock. The key takeaway for Gap continues to be an overreliance on buybacks to drive EPS. In 4Q buybacks accounted for 79% of EPS growth, which while down from 112% in 3Q, still speaks to the bigger story of unlikely multiple expansion. There were major customer traffic losses.
- COWEN: Q4 results beat on gross margin, but product costs will weigh on FY11
APPLIED MATERIALS (AMAT):
- MORGAN STANLEY: Buy. AMAT can sustain and expand overall operating margins on stable silicon sales. We think AMAT is gradually gaining investor confidence through execution and focus to drive higher profitability.
- CITI: Improving trends. Management said they saw a 30% decline in new customers in January as their promo was ineffective given intense competitive activity (likely due to Weight Watchers’ new product launch) and bargain-focused consumers. The company has since implemented new promo strategies. GM should improve through the year.
PINNACLE ENTERTAINMENT (PNK):
- BARCLAYS: Trying to improve. The company’s forward earnings should benefit from the full-year impact of recent cost savings initiatives as it starts new cost-saving plans. As its initiatives drive earnings growth throughout 2011, we expect the shares to react positively.
- COWEN: Downgrade to neutral. Deal uncertainty impacting the business.
- FBR CAPITAL: Outperform. Earnings power muted, but Macondo upside potential real.
LEXICON PHARMACEUTICALS (LXRX):
- COWEN: Neutral. Pipeline continues to progress.
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