Good morning. Here’s your daily equity research roundup from the Street.
BofA Merrill Lynch:
Yahoo! (YHOO): BofA analysts Justin Post and Joyce Tran are downgrading YHOO to Neutral from Buy after Yahoo announced that new CEO Marissa Mayer may revise plans for restructuring and returning cash to shareholders. The analysts write, “We think this is a clear signal that Yahoo is likely to: 1) invest in the business and 2) make material acquisitions and, while this strategy may make sense for those with a 3-5 year time frame (like the CEO), the strategy could disappoint a portion of the shareholder base. We had thought a more shareholder-friendly board would ensure all cash would be returned, and think it is unlikely this new 8-K would be filed without Yahoo board’s knowledge and approval.”
Kohl’s (KSS): Goldman analysts Adrianne Shapira, Matt Lambdin, Stephen Grambling, and Christopher Prykull are lowering their price target on KSS to $52 from $53 after the company revised forward guidance downward in its latest earnings announcement. The analysts write, “2H improvement hinges on what they can not control – traffic. We believe management’s lowered guidance provides acknowledgment that 2H is increasingly traffic dependent.”
Target (TGT) and Wal-Mart (WMT): Morgan Stanley analysts Mark Wiltamuth and Stephen Shin preview TGT and WMT earnings, writing, “We see upside potential in Walmart’s 2Q (reported Wed 8/15) on comp power and operating leverage, however we view valuation at 15x P/E as somewhat stretched. Target’s 2Q (reported Thurs 8/16) should have less surprise potential as monthly comps are already known and right down the middle of the fairway vs. management guidance. We prefer TGT as an Overweight as we see a valuation opportunity with core US operations only being valued at 12.3x P/E and both earnings and free cash flow poised to pick up in 2013 as Canada starts up.”
Nordstrom (JWN): Citi analysts Deborah Weinswig and Nathan Rich are raising their price target on JWN to $57 from $53 after the company beat earnings and raised forward guidance. The analysts write, “While the second quarter benefited from a lower tax rate and increased share repurchases, we have been encouraged by JWN’s recent topline momentum in a challenging economic environment. We raised our 2012 SSS estimate to 6.3%, up from 5.5% previously. The company also announced plans to accelerate the growth of its Rack division, expecting to double its Rack store base to more than 230 by 2016, which should drive topline and EPS growth over the long term.”
NVIDIA (NVDA): Deutsche Bank analysts Ross Seymore and Bob Gujavarty are reiterating their Hold rating but raising their price target on NVDA to $15 from $14 after the company reported strong earnings, writing, “We believe this is appropriate given the firm’s margin profile which largely offsets lower revenue growth and concerns about competitive intensity in GPUs and Handsets. Negative risks: slower PC unit growth, shift to lower end products, market share loss, and lower royalty income. Positive risks include better product mix, higher GPU attach rates, and market share gains.”
FXCM Inc (FXCM): JPMorgan analysts Kenneth Worthington and Rahul Nevatia are lowering their price target on FXCM to $13.50 from $15 after the company missed analysts’ expectations in their latest earnings announcement. The analysts write, “FXCM is introducing a principal component to its retail segment and has acquired a FX market-maker. This, at a time when the market is inundated with stories about failing risk management models, could weigh on the stock in the near term. FXCM has developed into a “show me” story and until it delivers with margin expansion and EPS growth, multiples could languish at depressed levels.”
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