Analyst Actions: Palm, Pier 1, Marvell Entertainment, Whiting Petroleum

Opinions on stocks from analysts around Wall Street on Tuesday

Citigroup cut its estimates and kept a sell opinion on Palm (PALM) shares after the company posted $0.01 first quarter loss (GAAP) per share, vs. $0.16 EPS a year ago, as narrowed gross profit, higher total operating expenses offset 1.4% revenue rise. Palm sees a second quarter loss (GAAP) of $0.01-$0.03 on $370-$380 million revenue.

Analyst Jim Suva said Palm's results were in line with Sept. 19 preannouncement, but sales and EPS outlook were meaningfully below consensus due to aggressive rebating amd lower-ASP products. He says the company's recapitalization is taking longer than expected due to challenges in fixed income markets.

Suva believes the company is focusing more on the consumer market and less on enterprises, thereby providing even more room for Research in Motion (RIMM). He thinks Palm's new Centro product could cannibalize its current product portfolio and likely faces challenges from several competing products.

He cut $0.19 fiscal year 2008 (May) EPS estimate to $0.06, $0.08 fiscal year 2009 to $0.03. He kept his $4.50 post-recap target price ($13.50 pre-recap). The stock fell 3.4% to $15.45.


Bernstein says it's positive on Pier 1 Imports (PIR), rated outperform with a $10 price target. Analyst Colin McGranahan says Pier 1 stock has traded off about 25% since reporting second quarter results, despite what he viewed as incrementally more positive than negative. He adds that liquidity concerns should have been somewhat mitigated by results, with expense cuts better than expected, cash balance well above forecasts.

McGranahan thinks the company's second quarter impressive performance on expenses shows exceptional capabilities of new CEO Alex Smith. He believes the expense side of its turnaround demonstrates aggressive, successful execution. He also notes that average comps trends have been improving, despite reduction in marketing spending. He says early signs of traction in merchandising point to improved focus and direction.

He sees $0.33 fiscal year 2008 (February) EPS. The stock jumped 12.7% to $5.42.


Cowen resumed coverage on Marvel Entertainment (MVL) with an outperform recommendation. Analyst Doug Creutz says he resumes coverage of Marvel as he believes the company's strategy to release internally produced films beginning in 2008 could drive significant earnings growth over the next several years.

He sees significant value in Marvel's intellectual property library, consisting of over 5,000 comic book characters, which has driven and should continue to drive strong returns on invested capital and meaningful free cash flow.

Creutz believes that the shares are poised to rebound from what has been a historically consistent (and temporary) post Spider Man movie share decline. He believes Marvel shares can outperform the market by at least 15% over the next 12 months. The stock rose 7.1% to $27.07.


Raymond James analyst Wayne Andrews says Whiting Petroleum (WLL) is one of the most undervalued and attractive opportunities in his exploration and production coverage universe due to its growth prospects, operating efficiency and current valuation. He notes Whiting closed a $194 million, 5 million-share secondary offering in July that gives it the necessary capital to pursue attractive drilling opportunities in the Piceance and Williston Basins.

Meanwhile, current investors should benefit from a capital investment incurred at Whiting's Postle and North Ward Estes enhanced recovery projects, which are expected to add 90 million barrels of oil in proved reserves, up 36% vs. yearend 2006.

He sees $2.58 2007 EPS and $3.02 in 2008. He has a $55 price target on the stock. The stock rose 4.7% to $47.06.

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