Let’s take a look at analysts’ morning notes.
- eBay (EBAY): Reiterate overweight. We continue to find eBay shares compelling and we are more positive on the shares following the fourth quarter results. As a company goes through a traditional lifecycle, the business eventually transitions from idea to execution. For eBay, that transition has been long, as the company began experiencing growing pains as far back as late 2004. Now we firmly believe that recent data suggest that management has pulled it off, despite the rarity of a technology turnaround. We are slightly increasing our above-consensus estimates to reflect a lower-than-expected tax rate and strength in the marketing services segment.
- Google (GOOG): Overweight. We are incrementally positive on these shares given recent data that suggest Google Instant drove fourth quarter earnings revenue strength. We do not believe consensus fully appreciates the 2011 earnings revenue potential that Google Instant may generate as the company rolls it out to more platforms/countries.
- Seagate Technology (STX): Maintain buy. We have a cautious outlook amid gross margin pressure and consumer softness. In the December quarter enterprise demand remained strong, but weakness in consumer PC demand, share losses, and weakness in Asia resulted in a unit decline of 1% for STX despite modest total addressable market growth.
- Fifth Third Bancorp (FITB): Bottom-line, it posted a fourth quarter earnings-per-share of $0.33 above consensus of $0.24 though all due to greater than expected reserve release. Loans advanced, white its net interest margin expanded. Results are expected to show a seasonal recovery in the second quarter and its announced $1.7 billion common stock issuance to repay TARP will increase its share count by 15%.
- Target (TGT): Maintain buy. Following a meeting with management we feel that comp-sales, which disappointed in December, should return to a mid-single digit trajectory and that fourth quarter earnings are on track to meet expectations. We also consider the recent entry into Canada as helpful to the long-term growth story.
- AMR Corporation (AMR): Maintain neutral. We recently downgraded it to neutral as we thought consensus estimates were way too high. We now expect consensus to fall importantly. Combined with the drop in AMR shares, we are incrementally warmer to the story but AMR is still low on our pecking order given the near-term revenue risks from its distribution negotiations and other structural challenges.
- Hologic (HOLX): Upgraded to buy from hold. We believe the pending approval/launch of its 3D mammography technology, tomo, is a key catalyst for the stock and a potential driver for earnings-per-share upside in 2011 and 2012. The company’s base business will continue to grow low/mid single-digits because of pressure from weak OB/GYN patient volumes but we believe that is understood by the Street and that the tomo launch is not fully reflected in the stock price.
- Fifth Third Bancorp (FITB): Reiterate buy. The fourth quarter results were strong, estimates moved higher and the TARP overhang is now past. It is also well-positioned among regionals and the recent rollover in bank stocks could present an investment opportunity.
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