GOLDMAN ADDS LEHMAN BROTHERS TO AMERICAS BUY LIST
Goldman Sachs analyst William Tanona says Lehman Brothers (LEH) first quarter EPS of $0.36 is above his estimate, as hedging proved to be more effective than he'd expected, leading to net write-downs of $1.8 billion. He adds that revenue from all businesses exceeded his expectations, with the exception of financial advisory.
Tanona is also encouraged by the strength shown in Lehman's equity trading operations, which the company attributed in part to prime brokerage, a growth area, in his view.
He thinks the market is discounting a much higher than likely probability of default for Lehman, particularly in light of recent Fed liquidity initiatives, that upcoming Fed actions will help ease many short-term liquidity concerns and stabilize financial markets. He has a 45 target price on the stock.
CITIGROUP UPGRADES TEEKAY TO BUY FROM HOLD
Citigroup analyst John Kartsonas says he views Teekay (TK) as a solid investment value despite his unfavorable industry outlook. He says the U.S. slowdown should not have a meaningful effect on Teekay, as the company operates internationally, and does not depend on U.S. capital markets for growth.
Kartsonas believes the stock already reflects a deteriorating charter rate environment. He thinks investors should realize a superior return on investment, even after accounting for his expectation of a weaker market next year. He expects the shares to outperform over the next six months, and he thinks could trade above his Street-low 45 price target.
He sees $3.33 2008 EPS, and $3.23 for 2009.
MERRIMAN DOWNGRADES DYNAVAX TECHNOLOGIES TO NEUTRAL FROM BUY
Merriman analyst Brian McCarthy says Dynavax Technologies' (DVAX) Heplisav clinical program, partnered with Merck (MRK), has been placed on clinical hold due to occurrence of one serious adverse event (SAE) in Phase III trial.
McCarthy notes the subject was preliminarily diagnosed with Wegener's granulomatosis, an inflammation of blood vessel walls; DVAV and MRK expected to investigate whether the subject had pre-existing condition and if vaccination contributed to SAE.
He says he recommends investors hold DVAX pending clarity on cause of SAE. He still sees $1.44 2008 loss per share, and $1.41 2009 loss.