Analyst Picks and Pans: American Express, Citrix, FormFactor

American Express Co. (AXP)Stifel Nicolaus upgrades to hold from sell

Stifel Nicolaus & Co. analyst Chris Brendler said on July 6 that the credit card lender would be among the least affected by new legislation and that loan-loss concerns are waning.

In a research note, Brendler said American Express' business model makes it the least likely to face negative effects from the government's recently passed legislation overhauling credit card lending. Brendler noted American Express' spend-centric model and small exposure to subprime borrowers as reasons it will see less of an impact from the new laws.

Brendler also said the lender is likely to see losses stabilize in the second half of 2009 as management has previously predicted.

Brendler, did however, note that credit losses are still rising. Nearly all lenders have faced mounting losses as more customers fall behind on repaying loans amid the recession and rising unemployment.

Despite the upgrade, Brendler maintained his earnings estimates for the stock. Brendler forecasts American Express will earn 65 cents per share in 2009 and 75 cents per share in 2010.

Citrix Systems Inc. (CTXS)Oppenheimer downgrades to perform from outperform

An Oppenheimer analyst downgraded Citrix Systems Inc. on Monday following a recent rally in its share price.

In a July 6 note to investors, Oppenheimer analyst Shaul Eyal lowered his rating of Fort Lauderdale, Fla.-based Citrix and withdrew his $33 price target.

Eyal noted that the stock has climbed 33% since early April, and is now trading at 19 times his estimate for its 2009 earnings per share, higher than his group median.

The analyst also said that recent checks show demand for the company's products is stable in North America, but "remains challenged" in Europe.

In addition, he said it is unlikely that Citrix will be bought by another company in the near future, saying probable acquirers like Cisco Systems Inc. and Hewlett-Packard Co. are still occupied with their past purchases of Webex and EDS, respectively.

FormFactor Inc. (FORM)Oppenheimer upgrades to outperform from perform

Oppenheimer analyst Gary Hsueh said on July 6 that the chip testing equipment maker's orders are starting to recover.

In a client note, Hsueh raised his rating for the stock and increased his price target by $8 to $30. Hsueh said checks indicate the company is being helped by major equity and debt refinancing by DRAM, or dynamic random access memory, chipmakers, as well as by a resurgence in DRAM research and development spending that is intended to make up for lower investments in the past year.

"Specifically, our checks indicate that FORM recently gained visibility on a 3x sequential uptick in wafer probe card orders from its largest customer, Elpida, for Q3 (Sept). Also, FORM is strongly positioned to regain share at Samsung and Inotera/Nanya for DDR3 wafer probe cards in Q4," he wrote.

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