Analyst Actions: Take-Two Interactive, GM, Genentech
WEDBUSH MORGAN UPGRADES TAKE-TWO INTERACTIVE
Wedbush Morgan analyst Michael Pachter says Take-Two Interactive Software (TTWO) has rejected Electronic Arts' (ERTS) unsolicited takeover bid of $26 per share, or about $2 billion. He says he was shocked and awed by the bid and his sell recommendation was wrong.
Pachter upgrades Take-Two to hold on his belief that EA fully intends to complete this deal, and Take-Two's investors will decide that a sale is the best option for them. He notes EA indicated it believes its stable franchises, financial resources, management and global publishing capabilities will positively impact the post-launch sales of Grand Theft Auto IV and other new Take-Two titles.
He expects Take-Two shares to trade based on the bid price for the foreseeable future. Along with upgrade, he sets a 26 target price.
DEUTSCHE BANK DOWNGRADES GENERAL MOTORS TO HOLD FROM BUY
Deutsche Bank analyst Rod Lache says he's increasingly concerned that a cyclical downturn in North America could be deeper than expected. He thinks this, with an unfavorable resolution to Delphi bankruptcy, could push General Motors' (GM) cash down to $16 billion - a dangerous territory heading into a potentially tough 2009.
Lache believes it may be prudent for GM to seek external financing, and he has grown somewhat more cautious about potential dilution. He says, this combined with elevated cyclical pressure in other markets, rising raw materials, protracted dislocation in credit markets, and increased risk within auto value chain makes him incrementally more cautious on auto and auto parts stocks.
RODMAN UPS GENENTECH TO OUTPERFORM FROM MARKET PERFORM
Rodman analyst Michael King says the FDA granted marketing approval for Genentech's (DNA) Avastin for use in treatment of first-line (previously untreated) HER-2 negative metastatic breast cancer (mBC) in combination with paclitaxel. He notes that the FDA used an accelerated approval process, a maneuver not anticipated, as DNA had not requested it.
King believes this is a shrewd move by FDA and DNA, as it allows DNA to market Avastin in first-line mBC while deflecting critics of FDA for being "soft" on DNA. He says DNA now regains key Avastin growth driver for 2008. Estimates market opportunity for Avastin in mBC as single indication at $2.1 billion by 2015.
He sees EPS of $3.07 for 2008 and $3.89 for 2009. He sets year-end price target of 90 for the stock.
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