Let’s take a look at analysts’ morning notes.
ABERCROMBIE & FITCH (ANF):
- OPPENHEIMER: High expectations for next quarter. Reiterate outperform.
- UBS: We see Q4 upside opportunity. We think ANF’s short-term outlook is favourable as it doesn’t anniversary aggressive promos until July and American Eagle (AEO) and Aeropostale (ARO) still need to improve product. We believe international margins are strong but story appreciated. The domestic margin potential is what’s debatable.
- UBS: Buy. More opportunity than surprise in FQ3. We look at any weakness stemming from the FQ3 profit warning, due to impacts from weather and fuel, as a very compelling entry point. The profit warning is at least partly priced in already, with the stock underperforming as broker estimates started coming down. We maintain our high conviction buy rating on FDX.
- GOLDMAN SACHS: Air freight outlook still positive. We believe the impacts from fuel and weather were largely anticipated by investors (although not to this degree) and that investor focus remains on a still-attractive FY2012 earnings potential. We are staying neutral on FDX and we believe it will benefit from improved domestic pricing and operational leverage.
- MORGAN STANLEY: The weather and fuel price disruptions do not affect our future earnings projections. In fact, FDX may be able to make up for some of the lost revenue before quarter-end or in F4Q. As a result, we are lowering our F3Q estimate from $1.10 to $0.85 but leaving FY12 unchanged at $6.85.
GREEN MOUNTAIN COFFEE ROASTERS (GMCR):
- KEYBANC: Upgrading rating from hold to buy. We are more positive on the sales outlook for GMCR owing to stronger than expected brewer sales in 1Q11 and the potential for additional brewer and pod/k-cup sales as a result of a partnership with Starbucks. As a result, we now expect the company to grow EPS at CAGR of 41% over the next three years which should support the stock’s valuation. We are increasing our FY11 sales estimate to $2.64 billion from $2.47 billion.
- OPPENHEIMER: Major updates coming to the Windows Phone 7 operating system which will build market share. But investors will have to be patient with Nokia’s transition from Symbian to the Windows Phone platform.
- UBS: Solid Q4 results, though helped by asset sales. The timeshare spin off moves MAR further along “asset light” continuum with 95% of remaining income from fee businesses.
BARNES & NOBLE (BKS):
- GOLDMAN SACHS: Upgrade to neutral and remove from sell list. Our more optimistic view is driven by new analysis on the earnings power of the firm’s internet business. Its competitive position seems poised to strengthen in its core retail business as BGP copes with financial challenges.
CAMPBELL SOUP COMPANY (CPB):
- RBC: Soup category remains a bit unsettled but Q2 results should be OK. We see decent support for the stock here in light of low expectations. CPB can better manage its merchandising plans after missing the mark in each of the past two seasons.
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