Let’s take a look at analysts’ morning notes:
- Verizon (VZ): Downgrade from buy to hold. A strong year is expected for wireless (iPhone, 4G). This is mostly reflected in the stock, which is now at a steep premium to AT&T, the S&P 500 and historical levels.
- On a price earnings basis, Verizon is trading at a 10% premium to the S&P 500 and at the highest premium versus AT&T that we have seen in the last 10 years. Further, AT&T is trading with a more attractive dividend yield despite Verizon having better dividend coverage. Our new 12-month price target for Verizon is $36 up from $35.
- Amyris (AMRS): Downgrade to equalweight from overweight. Following recent share price strength, we see a balanced risk/reward as reflected in our one to one bull to bear ration. Recent partnership agreements and news flow from Total derisk the story, we think, and we our raising our price target to $26. That said, we have limited confidence in a single-point estimate given the early stage nature of the business.
- Celanese Corp (CE).: Initiating at equalweight. Celanese is a high-quality company with attractive near and long-term growth drivers and the highest exposure to Asia in the industry. However, we believe market expectations are high, and consensus estimates appear already to reflect much of the good news. It is not an expensive stock but our $50 price target implies only 17% upside potential.
- Coach (COH): Maintain neutral rating. Holiday retail sales were solid, especially among upper-middle income consumers and in the outlet channel. Premium retailers have been beating expectations lately. We are encouraged by read-thrus for Coach;s key channels and consumer demos. It was armed with investory heading into strong trends among its core demos in its most seasonally important quarter. We are also impressed with how quickly the company has built a highly-profitable China business. We are raising the price target to $57 from $53.
- Autodesk (ADSK): Downgrading from buy to hold. No change to price target. We believe the stock reflect current positive macro trends and we can’t get comfortable with upside case that must be believed to initiate a new position here.
- Symantec (SYMC): Upgrading from hold to buy. Our analysis of organic, constant currency billings growth over the last nine quarters finds declines in seven of these quarters. Our industry inputs suggest top-line stability from the September quarter continued in December, aided by seasonal strength and more stable enterprise sales execution.
- While we don’t expect the company to distinguish itself versus our overall coverage universe, we expect organic “slight growth” versus decline to be a change from recent past.
BMO Capital Markets
- Retail Opportunity Investments (ROIC): Initiating coverage with an outperform rating. With a sizeable initial war chest now in play and veteran REIT executive Stuart Tanz at the helm, the company has already succeeded where many have not by acquiring stabilised and value-add shopping centres in select high-density markets.
- Lululemon Athletica (LULU): Maintain market perform rating. On the heels of better-than-expected holiday performance, Lululemon raised earnings-per-share guidance ahead of its presentation at the ICR conference. We believe growth was solid across both the retail and e-commerce channels.
- Meeting demand has been an ongoing challenge for the company (though not a bad problem to have) yet the company has nonetheless been able to drive solid gains. Looking ahead, we believe Lululemon is taking the right proactive measures to building capacity for rising demand across all of its channels, better position in-stock levels and investory and lay a solid foundation for longer-term growth.
- We are raising our fiscal year 2011 estimate to $1.92 and our price target is $66.
Robert W. Baird & Co.
- HeartWare (HTWR): Maintain neutral rating. The company announced that fourth quarter revenue will approximate $20 million and consensus estimates of $15.5 million. While this is positive for the company, we believe that investors are more concerned about the company’s long-term revenue potential several years out, not near-term quarterly fluctuations in sales.
- Genesco (GCO): Maintain outperform rating. The company raised its fourth quarter guidance as the company’s quarter-to-date comp (up 9%) is trending ahead of its plan for the quarter. We continue to believe that it is undervalued relative to its longer-term prospects (including 8% sales and 15-20% earnings-per-share growth).
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