Let’s take a look at analysts’ morning notes.
TEXAS INSTRUMENTS (TXN):
- BARCLAYS: Encouraging stock. The narrowed revenue and EPS ranges were inline with prior guidance. Management described that orders are trending higher with implied expectations of solid growth in 2Q and inventory is being built to support sequential growth.
- FBR: New guidance is not surprising. We remain constructive on TXN shares given the firm is building competitive advantages with its leading analogue market share, 300 mm manufacturing strategy, counter-cyclical capacity investments, unmatched manufacturing and product development scale, large sales force and portfolio cross-selling capabilities. While the sector could sell of further on rising oil prices or profit taking, would use any pullback as a buying opportunity.
- DEUTSCHE BANK: Markets are tracking as expected. Gaming and handset end markets are seasonally soft. The communications infrastructure area is expected to be down slightly, industrial is roughly flat while auto’s will grow. By geographies, Europe is expected to be up in the first quarter, flat in North America and Asia/Japan will see declining in the single digit range.
- CITI: Disappointing guidance but could be buying opportunity. While optical demand is certainly lumpy on quarterly basis, we believe overall demand remains healthy and view FNSR’s tepid guidance as almost exclusively FNSR-specific and related to significant exposure to Huawei, rather than a broad statement on industry demand.
BANK OF AMERICA (BAC):
- MORGAN STANLEY: One of our top picks for large cap banks. Investor day material was in-line with our outlook as they have goals, outlined a 3-year plan for largely eliminating mortgage tail risk and outlined rwa mitigation targets. However, management presentation delivery was better than expected.Lower losses, fading regulatory and litigation challenges and higher dividends are catalysts in 2011. BAC is cheap in our view.
- GOLDMAN SACHS: Buy. Earnings power at BAC remains around the $2.25 level despite regulatory hits and excess costs that are, in our view, hiding what the franchise is capable of. While normalized most likely will not be reached until 2013-2014, near-term results should improve as credit costs continue to normalize and expenses decline over the next 12-24 months.
SPRINT NEXTEL (S):
- MORGAN STANLEY: The rumours surrounding wireless consolidation may or may not come to fruition. We believe the wireless industry needs rationalization. AT&T and Verizon have significant scale advantages over their peers, who in many cases are suffering sustained subscriber losses and a challenging path to 4G. Irrespective of the rumours, we expect the industry to see some form of merger partnership in the coming months.
BANK OF NOVA SCOTIA (BNS):
- BARCLAYS: Dividend hike is not enough to offset miss. Compared to its peers Scotia has modest performance. Scotia’s valuation will likely underperform over the coming weeks.
DICK’S SPORTING GOODS (DKS):
- GOLDMAN SACHS: Bullish. Results showed big sales and gross margin beat expectation which means strong earnings power for 2011. Sales broke out from typical seasonal trend by the biggest magnitude in three years. We see potential for return of capital to shareholders.
STAGE STORES (SSI):
- BARCLAYS: Promising outlook. Ended the year with a strong balance sheet. Locations are highly productive and the rebranded stores are expected to see a subsequent 15% sales lift.
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