Let’s take a look at analysts’ morning notes.
- CITI: Accelerating. With sales of $109.2 billion at 2010 end, Wal-mart International is expected to serve as a growth engine ahead. We believe the acceleration in international sales and improvements in returns could help to support a valuation at a meaningful premium to current levels, down the road,
- GOLDMAN: Online power. We see strategic merit in WAG increasing its online and OTC distribution footprint as competition ramps from AMZN and other, more category-focused players.
MARRIOTT INTERNATIONAL (MAR):
- GOLDMAN: Timeshare value is questionable. We remain bullish on the hotel sector but our latest analysis suggests Marriott’s timeshare may be lower than expected, timeshare earnings are more cyclical than was historically perceived and the remaining Hotel entity multiple would have to expand dramatically to offset the possible dilution of the spin.
DARDEN RESTAURANTS (DRI):
- BARCLAYS: Recent volatility was uncharacteristic of Darden. 3QF11 EPS was in line with expectations but beneath the headlines there was significant comp and cost volatility versus their pre-announcement and/or our view. We believe casual dining is best positioned for outperformance in 2011 and Darden still offers the best fundamentals in the segment.
- MORGAN STANLEY: Removing from best ideas list, We still view TYC as one of our top picks in the industrials space and thinks shares of TYC are still attractively valued. We remain Overweight with a price target of $52. Catalysts we outlined seven months ago have mostly played out.
SMITHFIELD FOODS (SFD):
- MORGAN STANLEY: Cautious outlook. While Smithfield is currently enjoying favourable protein fundamentals and hedges, we remain cautious as believe that the best time to get bullish protein stocks is when things cannot get any worse. If this quarter’s 0.5% increase in the breeder herd ends up marking the start of a period of undisciplined expansion, it would put the hog industry’s ability to pass through higher feed costs at risk.
- CITI: Good outlook. 2011 looks to have significant EPS upside for Kellogg, and includes the premise that in 2011, a year with significantly increased innovation, new products are likely to be highly incremental as a result of a 305 SKU curtailment initiated by Kellogg in 3Q09.
RESEARCH IN MOTION (RIMM):
- CITI: Still attractive. We recognise the May quarter outlook is a big disappointment but our recent upgrade of international promotion shifts to RIMM away from Nokia in the quarters ahead on new products remains intact & supportive by RIMM’s full year EPS guidance showing a 2H ramp in new products & EPS acceleration.
MARATHON OIL (MRO):
- CITI: Value to be unlocked. There is further improvement in refining margins and higher Brent oil and European natural gas prices we outlined in our March 7th piece. Our thesis continues to be to own MRO into the split up and own both out of the split up to realise the full value of both business units.
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