Good morning, here’s your equity research roundup from the Street:
- Autos: Sales improved markedly during the month, with seasonally adjusted annual rate of sales topping 13 million, 300,000 above analyst expectations. Ford, Chrysler and GM led with gains, while Honda and Toyota posted declines of 8 and 18 per cent.
- Capital Markets: Maintaining expectations that both Goldman Sachs and Morgan Stanley will report core earnings per share losses in the third quarter. Declines into the end of the quarter are also pushing the value of the Industrial & Commercial Bank of China down, which Goldman owns a large share in.
- Apple Inc. (NASDAQ: AAPL): Barclays expects Apple to focus on its iOS 5 software today, as opposed to a completely new iPhone 5 release, though that may be in the cards. Analysts are forecasting an iPad 3 refresh in March 2012 with a price decline on the iPad 2 to $299 to $349.
- Visa Inc. (NYSE: V): Visa released new interchange rates for retailers following Bank of America’s decision last week to impose a $5 monthly fee. Visa will now charge retailers $0.05 + 1.60% on transactions, up from $0.04 + 1.55%.
- Newspapers: Channel checks indicate large declines in print advertising on declining retail ad placements. McClatchy is most exposed with a possible hit of 12% to earnings, followed by Gannett and The New York Times at nine and five per cent, respectively. Analysts see the paywall at The Times outperforming estimates.
- First Solar (NASDAQ: FSRL): The Department of Energy’s $1.46 billion loan guarantee will boost profits by about $0.50 a share as cost of capital declines 200 basis points.
- J.C. Penney (NYSE: JCP): CEO Ron Johnson announced the hiring of Target’s Chief Marketing Officer, Michael Francis. He will be charged with merchandising, marketing, and planning and allocation. The move is a sign that CEO Johnson is willing to use his Rolodex to push J.C. Penney into a more competitive fashion environment.
- Macy’s (NYSE: M): Analysts view changes to operations and merchandising strategy, partly on the My Macy’s initiative, finally paying off. Market share at former May stores has begun to return, which should remain for a few more quarters.
- Verisign (NASDAQ: VRSN): About 1.9 to 2 million domains were added to the .com and .net directories, in line with analyst expectations.
- Price Changes: Increases: Citigroup (2011 EPS to $3.41 from $3.22), KeyCorp (2011 EPS to $0.80 from $0.78), United Continental (2011 EPS to $3.20 from $3.10); Decreases: Bank of America (2011 EPS to -$0.20 from -$0.15), BlackRock (2011 EPS to $11.80 from $12.25),Charles Schwab (2011 EPS to $0.74 from $0.76).
- Airlines: Deutsche Bank is raising its September quarter pretax earnings forecast for the U.S. airline industry to $1.9 billion from $1.6 billion on better top-line growth and lower jet fuel prices. Delta, Alaska and United Continental expected to be profitable and free cash flow positive in 2011.
- MGM Resorts (NYSE: MGM): Macau remains growth driver, with management waiting for new 2nd floor VIP area to come online in December. MGM believes it can grow direct VIP business between 10 and 12% and continues to lend to clients.
- U.S. Insurance: Industry remains under pressure on prolonged low interest rates that could hit earnings and capital requirements. Analysts think life insurers could fund increases of 8% on average from current excess capital.
- VF Corp. (NYSE: VFC): Morgan sees the potential for VF to double its revenue through international growth and strong brand management. Analysts are reiterating a $148 price target.
- Coal: Stockpiles fell 11.0% to 147.8 million tons in July, or about 56 days of coal burn calculated on trailing 12-month demand. July inventory days are 1% below the five-year average, a level not seen since May. Consumption fell 3.5% in June and 3.3% in July from five-year levels.
- Natural Gas: Expecting inventories to increase to 3,412 billion cubic feet. Though temperatures are in line with last year, they are above the 5-year average.