Opinions on stocks from around Wall Street on Wednesday
From Standard & Poor's Equity ResearchCITIGROUP SAYS BAIDU.COM IS ATTRACTIVE BUYING OPPORTUNITY, MAINTAINS BUY
Citigroup analyst Jason Brueschke says Baidu.com (BIDU) shares lost 30% of value in five days. He says the sell-off appears to have been caused by Cisco Systems' (CSCO) disappointing outlook last week for its U.S. enterprise business, but says Baidu's China search market has little fundamental correlation with near-term outlook for US router demand.
Brueschke notes that the company guided for accelerating fourth quarter revenue growth, and posted very strong third quarter fundamental metrics. He says BIDU remains his top pick in China Internet for 2008. He has a $425 target price, based on target multiple at a 70% premium to China Internet peers, mainly due to BIDU's higher-than-peers EPS growth prospects and potential of China's nascent search market.
MORGAN KEEGAN DOWNGRADES LA-Z-BOY
Morgan Keegan analyst Laura Champine says La-Z-Boy's (LZB) third quarter operating EPS came in at $0.06, which was three cents below her estimate and six cents below the consensus. She notes that the company also significantly lowered its fiscal year 2008 (April) operating EPS guidance, to a range of a $0.06 loss to $0.02 EPS.
Champine downgrades LZB to underperform from market perform, as she sees "no light at the end of this tunnel." Given the company's year-over-year declines across all operating segments and the troubles in the overall industry, she feels the shares of LZB should be classified as a speculative investment.
She lowers $0.08 third quarter EPS estimate to $0.03 EPS, $0.30 fiscal year 2008 EPS to $0.01 loss. For fiscal year 2009, she cuts $0.54 EPS estimate to $0.14.
MORGAN KEEGAN DOWNGRADES TRAVELCENTERS OF AMERICA LLC TO MARKET PERFORM
Morgan Keepgan analyst John Lawrence says TravelCenters of America (TA) posted $0.77 third quarter loss, excluding employee severance charge of $0.79, vs. his estimate of $0.09 EPS and consensus estimate of $0.03 loss. He notes weak fuel demand from professional drivers and fleets continues to negatively impact TA's results.
Lawrence believes the soft industry conditions, as well as the tight fuel margin environment, will continue for a period of time, and the realization of the projected synergies from TA's Petro acquisition could take longer than expected. Thus, he widens his $0.43 fourth quarter 2007 loss estimate to $1.80 loss, $0.30 2008 loss estimate to $2.39 loss. He believes near term concerns will keep stock under pressure. He formerly rated TA outperform.