Stock Picks: NetFlix, Blackstone, Medivation, Freeport

Wall Street analyst opinions on stocks making headlines in Wednesday's market

NetFlix Inc.: Kaufman Bros. analyst Aaron Kessler lowered a rating on shares of NetFlix Inc. (NFLX) to hold from buy on Mar. 3.

In a note, Kessler said he believed shares of the U.S. mail-order movie-rental service were "fully valued" at current levels, trading at 26 times his 2010 pro forma earnings per share (EPS) estimate of $2.49 and 21 times his 2011 pro forma EPS projection of $3.12. "We would look to get more constructive on [the] shares in the low $60s," the analyst wrote.

Kessler said that based on his analysis of searches for the term "NetFlix" on Google, he expects "solid" subscriber growth to continue in the 2010 first quarter.

The analyst said potential positive catalysts for NetFlix shares include the successful rollout of the NetFlix streaming service for Wii in the spring and "continued traction" with the launch of the service for the PlayStation 3 platform; additional studio deals that expand Netflix's digital catalog; and the continued trend of lower subscriber turnover. Potential negatives for the stock include increased competition, postage rate increases, and more limited margin upside, said Kessler.

He maintained a $69 12-month price target on the shares.

Blackstone Group LP: Oppenheimer analyst Chris Kotowski raised a rating on shares of Blackstone Group LP (BX) to outperform from perform on Mar. 3.

In a note to clients, Kotowski said the world's biggest private-equity company's fourth quarter profit excluding some costs related to the firm's June 2007 initial public offering of 29 cents a share, reported Feb. 25, beat both his estimate of 10 cents and the Wall Street consensus view of 21 cents, due mostly to "very strong" performance fees and investment income; Kotkowski added that core fee earnings were above expectations as well.

Kotowski raised his EPS estimates for 2010 to 97 cents from 92 cents and for 2011 to $1.76 from $1.39 and established a $20.50 target price.

Medivation Inc.: Roth Capital analyst Andrew Vaino cut a rating on shares of Medivation Inc. (MDVN) to hold from buy on Mar. 3.

Pfizer Inc. (PFE) and Medivation said on Mar. 3 that Dimebon, their experimental drug for Alzheimer's disease, failed to benefit patients in an advanced study. The trial, dubbed Connection, included almost 600 patients with mild to moderate Alzheimer's disease from across the U.S., Europe and South America. The results counter an earlier study in Russia that found improvement in patients getting Dimebon.

Medivation shares fell 68% in early trading Mar. 3.

Vaino said in a Mar. 3 note that his odds of success of Dimebon reaching the market were 65%; he has decreased the odds to 30%, which may be "generous". The analyst said this has resulted in a decrease in his $2.52 2013 earnings per share (EPS) estimate for Medivation to 33 cents.

Vaino cut his $34 price target on the shares to $10.

Freeport-McMoRan Copper & Gold Inc.: RBC Capital analyst Fraser Phillips raised a rating on shares of Freeport-McMoRan Copper & Gold Inc. (FCX), the world's largest publicly traded copper producer, to outperform from sector perform on Mar. 3.

In a note, Phillips said the copper market remains "very tight". He also said he expects the molybdenum market to move into a supply deficit in 2010 and 2011, and prices to rise sharply. Phillips noted that molybdenum will account for 11% of Freeport's revenue in 2010 and 17% in 2011.

With the success the company has had in reducing costs and refinancing its balance sheet, the analyst said he believes Freeport is "well positioned" to benefit from rising prices for copper, gold and molybdenum.

Phillips expects the shares to outperform those of Freeport's peer group over the next 12 months, and has a $95 target on the stock.

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