Let’s take a look at analysts’ morning notes.
- Bullish on Buffalo Wild Wings (BWLD): It posted a solid 4Q result. More importantly, 2011 is off to a good start, with a 3.8% company SSS through the first six weeks. BWLD also reiterated guidance of over 18% earnings growth for 2011, off the higher 2010 base. Stock is still too cheap given unique combination of attractive unit growth and favourable commodity positioning for 2011. Maintain buy.
- Avon (AVP): Maintain buy. Lowering target to $34 from $36.
- Flowers Foods (FLO): Hold. Lowered target by $1 to $25.
- McDonald’s (MCD) is well positioned: Its key drivers are ROIC, earnings growth and earnings revisions. We believe these drivers are generally pointing up and that McDonald’s is well positioned for another year of upwards earnings revisions driven by above consensus sales performance. We expect U.S. trends to accelerate modestly in coming months while Europe could slow, but mid-single digit SSS growth appears achievable. McDonald’s has yet to take price in the U.S. and has historically performed well during periods of rising inflation and job growth.
- Dean Foods (DF): Lowering EPS estimates. Neutral.
- Ralcorp Holdings (RAH): Better than feared. Neutral.
- Sara Lee (SLE) has big climb: We estimate SLE needs close to 30% EBIT growth in its last two quarters to achieve its full year targets. The fundamental issue for SLE is having to catch up to a very inflationary cost curve with the magnitude of the gap between inflation and pricing in F2Q among the most sever that SLE has experienced in the recent past. That said, SLE’s past history does speak to its ability to ultimately catch up with the help of pricing though clearly the onus in on flawless execution in the back half of the fiscal year.
- Comstock Resources (CRK): Sector view is positive and raising price target to $34
- Wells Fargo’s (WFC) CFO exit is worrisome: The firm announced today that CFO Howard Atkins will retire effective immediately. In our view, Atkins is one of the top CFOs in banking, and is a very effective communicator of Wells Fargo’s strategy and we view his exit as a very big loss for the firm. In the past, Wells has historically been very careful on preparing the market for any senior management transitions so this announcement is different than the norm.
- Intuit Inc. (INTU): Initiating coverage with a buy/medium risk
- OpenTable (OPEN): Reiterate buy based on strong Q4 earnings
- Centene (CNC): Buy/high risk, raising price target from $27 to $35
- Broadcom Corporation (BRCM): Citi believes that positive outcomes are already priced into the stock
- Bearish on Avon Products (AVP): Reported weak Q4 adjusted EPS of $0.59. Results were very weak with 2% organic sales growth below our 4% forecast. Gross profit was 8% light versus our below consensus forecast on the revenue miss and a 190 bps GM miss versus our estimate but was offset at the margin line by lower-than-expected SG&A. While the bar is low for Avon and valuation should be protected by its exposure to the attractive beauty product category and emerging markets geographies, clearly fundamentals remain under pressure.
- Sierra Wireless (SWIR): JPMorgan downgrades to underweight from neutral
- Avery Dennison Corporation (AVY): Banc of America downgrades to equalweight from overweight
- Pike Electric Corporation (PIKE): FBR upgrades to OP on improving outlook
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