Let’s take a look at analyst morning notes:
- JANNEY MONTGOMERY: Buy. The point of the price increase is to communicate to the trade that spot commodity cost moves led by cocoa supply will be reflected in pricing going forward and whether that’s successful will be driven by the consumer. Importantly, similar action by competitors confirms healthy category dynamics, enabling HSY to focus on its recently successful customer drive go-to market strategy.
- STIFEL NICOLAUS: Price increase is a positive for earnings and we are taking up our estimates for 2012 but we also acknowledge the likelihood of heavier input cost inflation in 2012. The small benefit of pricing we now estimate for 2011 will likely overcome this cost and not aid its earnings growth in the short-run.
- JPMORGAN: Top pick. We believe the street broadly shares our view and expects confirmation that Provenge will continue to be reimbursed according to the labelled indication. We consider this another meaningful de-risking event. There could also be incremental buyers waiting for this important box to be checked. DNDN remains our top pick.
- RBC: Undervalued stock. CMS released their proposed memo which recommends full coverage for Provenge for the on-label indication. This is a positive because it removes another overhang, and with growing capacity, clears the deck for DNDN to fully market the drug across the U.S. Our long-term thesis is that Provenge can become at least a $1 billion drug which the stock undervalued at a $4-5 billion market cap.
WESTERN DIGITAL (WDC):
- THINKEQUITY: Buy. While we are not suggesting that an improvement in HDD industry demand dynamics is imminent, we are cautiously optimistic on the potential of the recent consolidation to improve industry fundamentals. We are impressed by WDC’s cost-leadership, which we believe bestows WDC with a significant source of competitive advantage which could enable it to sustain its share gains in the future.
- RBC: Acquisition of Radian6 is a positive. Although it is a little on the pricey side at close to 10 times sales, we appreciate its leading position and can see how the transaction should extend the value of and strengthen CRM’s social media offerings for the enterprise.
CACI INTERNATIONAL (CACI):
- LAZARD: Solid execution and good positioning but slowing top and bottom-line growth. We have a positive outlook for CACI nearer term; however, given the CACI’s strong share performance and our expectations for moderating top- and bottom-line growth, we believe meaningful upside is less likely and see a tighter trading range near term.
- Morgan Stanley: We believe the market for xEVs (plug-in-hybrids or PHEVs and pure EVs) is underestimated as rising oil prices and government support accelerate the shift away from the internal combustion engine. This shift has made room for entirely new players to join the ranks of currently entrenched OEMs, and has afforded Tesla the opportunity to establish itself as America’s fourth automaker. The biggest risk remains Tesla’s own execution of its plan. Despite its extremely risky profile, the almost 200% upside to our base case $70 price target is enough to justify an Overweight rating.
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