Good morning, here’s your equity research roundup from the Street:
- Increased price targets and EPS estimates on three stocks this morning: American Water Works, Knight Capital Group and Noble Energy.
- U.S. Large-Cap & Mid-Cap Banks: FDIC insured banks reported an aggregate net income of $29 billion in the second quarter. The FDIC removed 23 institutions from its list of problem banks, bringing the number down to 865 (or 11% of the 7,613 banks that are FDIC insured).
- Conagra (NYSE: CAG): Ralcorp Holdings rejected Conagra’s takeover offer for $94 a share. The company believes current management can bolster long term value for shareholders but noted that nothing is off the table yet.
- Noble Energy (NYSE: NBL): Colorado and West African lines have potential to boost capacity by approximately 5%. Two major wells are due by year’s end in the Gulf of Mexico, including Deep Blue. Barclays estimates it has a 50% chance of success.
- AT&T (NYSE: T): With data from the Department of Justice suit in hand, analysts believe a traditional divestiture will not pacify regulators. Instead, Citi sees alternative scenarios coming forward – including a possible MVNO/spectrum share agreement between AT&T and T-Mobile
- FedEx (NYSE: FDX): Lowering guidance on the transport company, but maintains buy rating. Believes increased maintenance, pension and integration costs have weighed on EPS for 2011, but will not in 2012.
- General Mills (NYSE: GIS): Expects sales up 2.5% to $3.8 billion when reported on Thursday, September 22. Analysts believe “strong brands, a solid innovation pipeline” will keep the company above last year’s levels.
- Humana (NYSE: HUM): The company acquires NextCare urgent care medical centres today in the Atlanta region. Maintains overweight rating on vertical integration growth.
- Housing Starts: Numbers fell 5% to 571,000, but permits for new construction unexpectedly surged. DB was expecting the figure to be closer to 600,000. Analysts believe that though a lull will continue, there are recent developments that merit attention: “With the inventory glut diminishing, the recent trend in home prices has been modestly encouraging. The 3-month change for both Case-Shiller (+0.3%) and FHFA (+1.6%) indices have turned into positive territory.”
- Nasdaq OMX (NASDAQ: NDAQ): Volumes growing steadily, even in the face of macro uncertainty. Board sees chance to either deploy cash for buybacks or possible acquisition in the future.
- Towers Watson & Co (NYSE: TW): Company hopes to fuel growth through new innovation dedicated group. TW was focused on margin improvement over the past year.
- Upgrades: The travellers Companies, Inc. to buy and Soriana to neutral
- Coke (NYSE: KO): Coca-Cola is better positioned than Pepsi through the past 52-week in-store circulars and promotions. Pepsi has lost market share in 16 of the past 22 quarters.
- Gilead Sciences (NASDAQ: GILD): Latest trial of Gilead’s four-in-one HIV pill showed promising data. 90% of ‘quad’ patients achieved HIV RNA levels of less than 50 copies/mL through week 48 of the trial. Notably, ‘quad’ showed a better tolerability among patients compared to Reyataz, with only 3.1% discontinuing due to side effects.
- Kohl’s (NYSE: KSS): New launches of Marc Anthony and Jennifer Lopez lines not fairing as well — or receiving similar media attention — as recent Missoni for Target comparison. Price points are higher than past Kohl’s debut of Simply Vera, by Vera Wang, which will hamper sales.
- Ethanol Producers: U.S. market supported by global conditions like declining corn prices. The Renewable Fuel Association believes exports could reach 1 billion gallons by year’s end.
- Bridgepoint Education (NYSE: BPI): Management expects flat new enrollments for 2011, but for that figure to turn positive in 2012. The company remains the subject of New York and Iowa Attorney General inquiries, weighing on the stock.
- Medicine: Prostate cancer market has remained stagnant without any new comprehensive treatments over past seven years. But, in the past 18 months that has changed. Provenge, Zytiga and Jevtana have all received FDA approval and another dozen drugs are in mid to late trials. Jefferies sees the market in the multi-billions, with more than 4.5 million patients in the Eurozone and U.S. in 2012.
- Abbott (NYSE: ABT): Initiating cover of Abbott which the firm sees trading at discount to peers. Growth from emerging markets and fewer patents expiring positive for the health care conglomerate.
- Emerging Market Economics: Turkey, Brazil, and Russia have all eased monetary policies. Inflation may be a concern; central banks will not have full ability to keep interest rates low for long.
- Citrix Systems (NASDAQ: CTXS): Citrix has not seen any customer behaviour changes through this last week in September . Management expects 20% or greater desktop licence growth in the second half of 2011.
- MGM Resorts (NYSE: MGM): Upgraded to overweight on lower risk profile and improving trends in the Las Vegas region. Increased gaming revenue, coupled with results out of Macau, should buoy the firm.
- Commodities: Corn prices dropped 5% last week, remain up year-over-year. The USDA has rated only 51% of the crop as good or excellent, down from 68% last year.
- Tyco International (NYSE: TYC): Company plan to split into three expected to close within 12 months. Sees units as potential takeover target once smaller.
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