Good morning. Here’s your morning equity research take out from the Street.
- Avon (AVP): Citi is slashing its price target as the company reported disappointing sales for the quarter. 2012 EPS lowered from $2.20 to $1.75 and target price is now $22 from $29. The company, trading at a 10.5 P/E multiple looks cheap to analyst Wendy Nicholson, but unless the company can right the ship, it will continue to face downward price pressure.
- Advanced Micro Devices (AMD): Increasing price target to $8.00, up a dollar. The company made inroads in the notebook market, likely stealing market share from Intel. The announcement of Trinity, its next core driver, will drive results when released early in 2012.
- Franklin Resources (BEN): Analyst William Kats is increasing the price target to $135 from $130 as margins held up even with no layoffs and increased marketing spend.
- Costco Wholesale (COST): Analyst Michael Exstein is increasing price targets to $93, up eight dollars. Same-store strength continues to boost top-line growth, making the company a strong value proposition for customers.
- P.F. Chang’s China Bistro (PFCB): Price target is lowered to $30 from $34, with analyst Keith Siegner seeing share buybacks as too aggressive. The company, he believes, should be reinvesting in stores which are facing negative comps and no improvement in sight.
- Time Warner Cable (TWC): The cable company missed earnings estimates when it reported third quarter results on softness in advertising and subscription revenues. Credit Suisse is lowering the company’s price target to $80 from $92.
- Whole Foods Market (WFM): Upgraded from sell to neutral with an increased price target to $72. Analyst Edward Kelly thinks the company will have to push smaller store footprints to bolster growth, as big box locations are more difficult to place.
- Aetna (AET): Strong quarterly results have Deutsche Bank increasing price target by a dollar to $54. 2011 EPS estimate has been increased 37%.
- Coca-Cola (KO): Analyst Bill Schmitz is initiating with a buy rating and $75 price target. The alignment of activities, between bottling and retail, will help Coke maintain margins even as commodity prices begin to increase.
- MF Global (MF): Recent ratings downgrades have analysts lowering price targets 50% to just $3. The company is heavily exposed to Europe and although the levered EFSF may help, it is unlikely to fully boost the company.
- Northrop Grumman (NOC): Price target up to $63 from $57, although the company maintains a hold rating on Northrop. Below the line activity boosted results, i.e. lower tax rate. But the company’s increased guidance and improved margins are promising.
- Medco Health Solutions (MHS): Analyst Ricky Goldwasser believes that there is a 70% probability that the company will gain approval to merge with Express Scripts. However, he is lowering the price target from $66 to $65.
- Starwood Hotels (HOT): The company gave wide guidance during its most recent quarterly results, highlighting difficult visibility of 2012 revenue per available room. Morgan is increasing the companies price target to $50 from $47.
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