From Standard & Poor's Equity ResearchCITIGROUP CUTS GENERAL MOTORS, FORD TO SELL FROM HOLD
Citigroup analyst Itay Michaeli downgrades General Motors (GM) and Ford Motor (F) to sell from hold on deteriorating global credit conditions and unappealing valuations.
After maintaining a cautious stance on automakers throughout the past several months, Michaeli believes the risk-reward balance has tilted decidedly negative on both absolute value and relative value versus underperforming suppliers.
He cuts price targets for GM to $6 from $12 and Ford to $2.50 from $5.50 on lower EPS estimates. He sees EPS power declining on shrinking finance company balance sheets and higher debt loads.
FBR CAPITAL CUTS ESTIMATES, TARGET FOR ALCOA
FBR Capital analyst Amir Arif says Alcoa's (AA) $0.39 adjusted EPS (including $0.06/share currency translation) compares to consensus/FBR $0.53/$0.58 estimates.
Arif says Alcoa's upstream operations were impacted by margin compression as input costs remained high; downstream operations were hit by softening end-user demand. He says we will see greater negative impact from softer end markets and further compression of upstream margins; upstream volume growth is being reduced and cash is being conserved, with only critical capex taking place.
He cuts $2.16 2008 EPS estimate to $1.74, $3.02 for 2009 to $2.05, and $43 price target to $23. He keeps an outperform recommendation on the stock.
CREDIT SUISSE DOWNGRADES OFFICE DEPOT TO UNDERPERFORM FROM NEUTRAL
Credit Suisse analyst Gary Balter says he is reducing estimates on three office supply retailers: Office Depot (ODP), Staples (SPLS) and OfficeMax (OMX).
Balter notes that his estimate cuts are based on continued contraction of credit terms to small- and mid-sized businesses, weakness at financial firms and other major users of office supply products, and much weaker outlook for European economies.
His downgrade of ODP is based on his concern that its exposure to Europe and more levered balance sheet makes it most vulnerable on an EPS and liquidity basis. He maintains $0.43 2008 EPS estimate and cuts $0.55 2009 forecast to $0.30. He also slashes his $8 price target to $4.