Analyst Actions: Sunpower, Bare Escentuals, OfficeMax, AGCO
CREDIT SUISSE UPGRADES SUNPOWER TO OUTPERFORM FROM NEUTRAL
Credit Suisse analyst Satya Kumar says despite weakening demand in Spain in the second half of 2008, global demand is tracking much better than expected due to strength in Italy and other geographies. Accordingly, he upgrades Sunpower (SPWR) shares, based on his belief that the bias to earnings estimates is once again to the upside, as pricing will hold up better than expected.
Kumar notes that SPWR earlier this year raised its profile in Italy through its acquisition of Solar Solutions, a solar systems integration and product distribution company.
He maintains his 2009 revenue/EPS estimate of $2.22 billion/$3.88, vs. the $1.93 billion/$3.37 consensus estimate. He sets 100 target price on the stock.
CITIGROUP UPGRADES BARE ESCENTUALS TO BUY FROM HOLD
Citigroup analyst Wendy Nicholson says Bare Escentuals (BARE) shares have fallen roughly 50% over the last 12 months, which she suspects stems from concerns about slowing productivity, a troubled infomercial business, the delayed Starter Kit launch, insufficient management breadth, a challenging macro environment, and active insider selling.
However, Nicholson does not think these issues will prevent BARE from meeting its target for 20%-plus growth in both revenues and earnings in 2008. She also believes, at recent levels, BARE's shares are attractively valued and offer a compelling risk/reward scenario for investors.
She maintains $1.18 2008 EPS and $1.42 2009 estimates, although trims her 30 price target to 27.
CREDIT SUISSE DOWNGRADES OFFICEMAX TO NEUTRAL FROM OUTPERFORM
Credit Suisse analyst Gary Balter says he downgrades OfficeMax (OMX) and lowers his price target from 25 to 20.
He thinks CEO Sam Duncan and his team have done a great job with this turnaround thus far, moving operating margins up some 300 basis points. However, he's disappointed managment has elected to fight from a third place position in a tough macro market rather than try to join the leader, with Staples (SPLS) and Corporate Express (CXP) merger a near certainty that takes away his primary reason for recommending OMX.
Balter also believes operating margins have peaked at least for a couple years as macro takes its toll, easiest cost cuts have been made, inflation creeps higher, Staples moves into previously high-margin retail markets, and middle-market business stalls.
WACHOVIA UPGRADES AGCO TO OUTPERFORM FROM MARKET PERFORM
Wachovia analyst Andrew Casey says based on AGCO (AG) stock's recent pullback and apparent improved long-term commodity price fundamentals that should support a longer agricultural equipment cycle and relatively aggressive pricing actions as indicated by North American dealer channel checks, he upgrades the shares of AG.
Casey also raises $3.15 2008 EPS estimate to $3.20 and $3.75 for 2009 to $3.80 due to both modestly higher revenue and EBIT margin expectations.
He believes that there is likely upside to his longer-term expectations, so he is relaxing his valuation multiples. He raises his valuation range to $63-66 from $60-63 range.