Analyst Picks and Pans: BofA, UnitedHealth, Actuant, Blue Coat

Bank of America (BAC)Keefe, Bruyette & Woods upgrades to outperform from market perform

Keefe, Bruyette & Woods analyst Jefferson Harralson noted that

Bank of America is among the cheapest of its big bank peers and raised his target price on the stock by $4.50 to $16.50.

Harralson said the upgrade was warranted because the Charlotte, N.C.-based bank currently trades at a level significantly lower than many of its peers, but has considerable earnings power.

Harralson also believes that the bank can easily exceed its government mandated capital raise of $33.9 billion, and could repay $45 billion in government bailout funds later this year or early in 2010.

So far, the bank has raised nearly $33 billion and said it expects to top the government's required amount.

Bank of America has received $45 billion in government funds since the start of the financial crisis last fall, a portion of which was provided to help the bank manage massive losses from its acquisition of Merrill Lynch & Co.UnitedHealth Group Inc. (UNH)Oppenheimer & Co. downgrades to underperform from perform

Oppenheimer analyst Carl McDonald said on June 11 that the largest U.S. health insurer faces a smaller profit in 2010 because it expects unrealistic Medicare reimbursement rates.

McDonald said the Minnetonka, Minn.-based company assumes Medicare costs will fall next year because physician costs will come down. But McDonald said that is very unlikely, and UnitedHealth will probably face a third consecutive year of smaller profits. He cut his share price target to $24 from $32.

McDonald said UnitedHealth projects a 21% drop in physician costs and expects the Centers for Medicare and Medicaid Services to adjust its rates accordingly. But the 2010 Medicare season starts Oct. 1, and there is probably not enough time before then for the Centers to lower their rates.

The company's competitors think Medicare rates will fall about 5% next year, with costs going up about 5 percent, McDonald said. He cut his 2010 profit estimate for UnitedHealth to $3 per share from $3.30 per share.

Actuant Corp. (ATU)Jefferies & Co. reiterates hold

Jefferies analyst Yvonne Varano said in a June 11 note to investors that weakness in the Butler, Wis.-based company's markets are expected to continue into its fiscal fourth quarter ending in August.

"We continue to look for increased clarity on demand prior to becoming constructive on the shares," she said.

However, Varano increased her share price target to $11 from $9. The stock finished trading at $13.02 on June 10.

Actuant said on June 10 it expects to report earnings of 6 cents to 8 cents per share on revenue of about $290 million for the fiscal third quarter. Previously, the company forecast profit of 12 cents to 20 cents per share on revenue of $300 million to $320 million. The company attributed the lower expected profit to an expected impairment charge, an acceleration in restructuring activities, corresponding costs and modestly weaker-than-expected sales.

Blue Coat Systems Inc. (BCSI)Merriman Curhan Ford upgrades to buy from neutral

Merriman Curhan Ford analyst Alex Kurtz predicted a strong fiscal year for the maker of security software and hardware. Blue Coat "has positioned itself for a solid (fiscal 2010) as the company benefits from stable demand for its core technologies," Kurtz wrote in a June 11 note to investors Thursday.

The analyst said despite his caution on Blue Coat's $268 million acquisition last year of Packeteer Inc., a bandwidth management company, the deal has made Blue Coat more "relevant among larger enterprises."

Even with the stock up nearly 83% year-to-date, Kurtz said the share price "still appears attractive."

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