Here’s what analysts’ are talking about this morning:
AT&T inc. (T)
- BARCLAYS: We view AT&T’s $39BN purchase of T-Mobile USA as a material positive for AT&T. The deal (a) makes operational sense (both are GSM carriers, so network integration is relatively straightforward), with $3BN in annual synergies conservative, in our view, (b) gives T an industry-leading spectrum footprint (135Mhz on average, >100Mhz in 87% of footprint, vs. 88Mhz and 23% for VZ), and (c) improves the long-term market pricing dynamic. Regulatory approval is doable, in our view, but certainly not easy.
NEW YORK TIMES (NYT)
- CITI: Based on our analysis of the NYT paywall and tablet economics, we’re upgrading to Buy from Hold. Our analysis has three key takeaways: 1) subscriber break even point relatively low; 2) adoption scenarios suggest meaningful upside and 3) print to tablet migration likely manageable. We maintain our $11.50 target price, which represents 25% to Friday’s close. Key risks include: 1) we could be too early; 2) paid adoption might be softer than we expect and 3) migration of print to digital may be more rapid than we expect.
American Express Co. (AXP)
- CITI: Reiterate buy on Fed capital plan approval. In an 8K filing, AXP disclosed that they received no objections from the Fed on their 2011 capital distribution plan. AXP reiterated their 50% payout ratio to shareholders which will come in the form of both dividends and stock repurchases. The company will commence buying back stock after it lifts its standard “blackout” following Q1 earnings results which we peg to be likely in late April. Reiterate Buy (1M) and target price of $60 based on 14x our 2012 EPS estimate.
- DEUTSCHE BANK: Tgt $82 to $90. Positive analyst meeting from COP expected Wednesday 23rd March 2011. We expect ConocoPhillips to refresh and extend through 2012 its differentiated shareholder-friendly “shrink to grow” strategy. The major disposal-to-share buyback programme is unique among major oils in exploiting the arbitrage between equity market valuations for majors, and asset market values for individual assets when sold. We believe all the majors apart from COP are failing to act sufficiently aggressively on this. That is partly because COP CEO Jim Mulva has the highest leverage to share price of the “Big Six” CEOs. Reiterate Buy on higher PT of $90.
NEWMONT MINING CORPORATION (NEM)
- DEUTSCHE BANK: We continue to be buyers of Newmont’s stock ahead of its April 7th Investor Day. We believe management will assuage market concerns that have led to recent underperformance by articulating a medium-term growth target for gold production (DB at 6.0m oz by 2016E), provide more granularity on greenfield/brownfield mines and importantly clarify intended use of remaining free cash flow (ie, re-investing, dividends and/or share buy-backs). Despite flattish near-term production, Newmont could still generate$1bn of free cash flow by YE12 even at flat gold prices and use of cash was most questioned topic by investors.
- BARCLAYS: Stock rating 1-overweight; price target: $64. Quest is clearly focused on M&A as a source of growth and we believe this is positive, although we believe it may take some time for the company to get credit for this transaction. The key to whether or not the acquisition of Celera is a success, in our view, is if Quest is able to grow Celera, despite Celera having a hard time growing as a stand-alone company in recent years.
GEVO INC (GEVO)
- CITI: We are nitiating coverage w/ a Hold & $21 PT. GEVO is a biofuels company that should be the first to commercially produce isobutanol – a product with several end mkts – from the same starch-based feedstocks (like corn) used in ethanol.
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