Let’s take a look at analysts’ morning notes.
- MORGAN STANLEY: GSI deal taps large retail opportunity. We estimate the acquired businesses to equate to $770 million of 2010 revenue. The consideration will be all cash funded by eBay’s balance sheet cash and its commercial paper facility.
- BARCLAYS: Stock is OK despite losing top 3 shareholders. While large black trades tend to put near-term pressure on the stock, we note in this case that Hertz’s sponsors are keeping a large stake, giving them continued exposure to the stock’s upside potential. Additionally the removal of a known overhang could help the shares in the near-term.
BEST BUY (BBY):
- GOLDMAN: Inexpensive stock. We have been struck by the market’s sharp reaction to BBY’s recent results, not withstanding very valid strategic concerns – which we share – about the company’s strategic positioning, most notably the sustainability of its margins in an era of pricing transparency. BBY is better able to capitalise of the tablet trend, in our view, but faces challenges related to e-commerce that HPQ and DELL do not.
ABERCROMBIE & FITCH (ANF):
- CITI: International growth opportunities. The key, in our view, will be whether the ramp in international sales can offset a more downbeat gross margin picture across 2H11. We think international sales can reach management’s goal for 30% penetration in 2012 in 2011, with sales of $1.2 billion outside the U.S. this year.
PHILLIPS-VAN HEUSEN (PVH):
- DEUTSCHE BANK: Solid outlook. 4Q EPS comes in ahead of plan. Relative to our model, the remaining coverage came on revenue and gross margin, both of which were strong.
- BARCLAYS: Lower tax rate is boosting stock. The company benefited from a lower tax rate of 26.0% which resulted from the transfer of certain Tommy Hilfiger brand intangibles to a European subsidiary. The impact will apply to all future periods and gives PVH an effective tax rate closer to those of its peers with similar geographic distribution.
- MORGAN STANLEY: Big step forward in Mobile. It was reported that MA, Google, Citigroup and VeriFone Systems are forming a venture that would enable Android users to make payments for goods and services using their mobile phones. While we continue to believe that cracking the mobile puzzle will be difficult and take some time, we think this is an influential collection of players whose capabilities and reach may provide a material catalyst for accelerating the adoption and growth of mobile payments in the U.S.
- CITI: Upgrading to hold from sell. While we believe SWY has benefited from inflation pass-through in recent months, there could still be risks if inflation accelerates to the 5%-plus range, or the competitive environment heats up. SWY’s savings program, “Just For U”, will drive loyalty as customers save time and money with tailored deals.
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