From Standard & Poor's Equity ResearchGOLDMAN UPGRADES LOWE'S TO BUY FROM NEUTRAL
Goldman Sachs analyst Matthew Fassler says there are three drivers behind his upgrade of Lowe's Companies (LOW): 1) Housing data is stabilizing; 2) Company and Street estimates still appear reasonable after a strong second quarter; Street expectations about likely store growth appear reasonable as well, with investors prepared, he thinks, for a modest cut; 3) His normalized EPS assessment has crept higher based on recently resilient margins, and he sees an increasingly fixed (vs. variable) cost structure helping LOW leverage to a greater degree when sales recover.
Fassler sees $1.53 fiscal year 2009 (January) EPS, $1.60 fiscal year 2010, and $1.80 fiscal year 2011. He raises his target price by $1 to $28.
SANDLER O'NEILL UPGRADES REGIONS FINANCIAL TO HOLD FROM SELL ON VALUATION
Regions Financial (RF) assumes from FDIC about $900 million in total deposits, including all uninsured deposits, of Integrity Bank.
Sandler O'Neill analyst Kevin Fitzsimmons says RF shares are down roughly 64% since early February and now trade at 86% of tangible book value per share (before the market open). He notes that the shares fell below his $10 target.
Fitzsimmons also suspects there may be short covering on news RF is assuming deposits of Integrity Bank. He views the deal as net positive as it provides additional deposit funding, which helps incrementally boost the company's liquidity and keep a lid on funding costs amid a competitive deposit pricing environment. Also, he notes the deal also allows RF to boost its market share in metro Atlanta and gain instant access to new customers.