S&P Picks and Pans: Hewlett-Packard, Yahoo, Home Depot, Corning, New York Times

Analysts' opinions on stocks in the news Tuesday

S&P REITERATES STRONG BUY RECOMMENDATION ON SHARES OF HEWLETT-PACKARD (HPQ; 33.04):

HPQ announces preliminary results for October-quarter including non-GAAP EPS of $1.03 (GAAP $0.84), vs. $0.86 ($0.81), which is a penny above our estimate. Revenues rose 19%, reflecting the EDS acquisition and about 5% growth excluding EDS effects. The company expects currency exchange rates for fiscal year 2009 (October) to hurt dollar-reported revenue by 6%-7%. We are lowering our fiscal year 2009 EPS estimate to $4.05 from $4.30, and reducing our 12-month target price to $44 from $61 as we incorporate our new EPS projections and a lower target p-e multiple, near peers, in our analysis. -T. Smith-CFA

S&P REITERATES BUY OPINION ON SHARES OF YAHOO INC. (YHOO; 10.63):

Yahoo announces co-founder Jerry Yang will step down from the CEO role once a successor is in place. We think this is a material positive, because we now see a greater likelihood that the company will sooner rather than later take more aggressive shareholder-friendly actions, including perhaps pursuit of some kind of search-focused alignment with Microsoft (MSFT; 19.32). We think even though Yang meant well for YHOO, his departure from the CEO role is overdue, following what we believe have been multiple corporate failures since he assumed the top job at the company. -S. Kessler

S&P REITERATES HOLD RECOMMENDATION ON SHARES OF HOME DEPOT (HD; 21.34):

October-quarter EPS of $0.45, vs. $0.59, is $0.10 higher than our estimate. Results reflect a comp-store sales decline of 8.3%, modestly better than our forecast. As a result, we are increasing our fiscal year 2009 (January) and fiscal year 2010 operating EPS estimates to $1.71 and $1.38 from $1.63 and $1.31, but are keeping our DCF-based target price at $24. We expect continued macro pressures throughout fiscal year 2010 in the forms of a decline in housing starts, rising unemployment and continued tight consumer credit. Positive offsets for HD include a superior balance sheet and significant generation of free cash flow. -M. Souers

S&P MAINTAINS HOLD RECOMMENDATION ON SHARES OF CORNING (GLW; 7.85):

Owing largely to continued weakness in its liquid crystal display supply chain, GLW sees fourth quarter below its prior guidance for sales of $1.1-$1.2 billion and EPS of $0.20-$0.28. Panel makers are reducing their factory utilization to align to the softening demand for LCD televisions and desktop monitors. GLW plans to make further capacity reductions in its glass manufacturing, which is expected to negatively impact overall gross margins. However, we believe that what we see as GLW's solid financial position, with $3.2 billion cash, will allow it to maneuver through any prolonged industry downturn. -T. Rosenbluth, A.Bensinger

S&P MAINTAINS SELL RECOMMENDATION ON SHARES OF NEW YORK TIMES (NYT; 7.14):

On concerns about weak ad and circulation revenues, we reduce our 2008 EPS estimate by $0.04 to $0.54 and 2009 by $0.06 to $0.58, both including severance costs. NYT faces refinancing of a $400 million revolving credit agreement due May 2009, with $398 million outstanding on Sept. 28. Its credit rating was lowered recently and is now rated below investment grade by S&P Credit Rating Services (an entity that operates independently of S&P Equity Research Services). NYT said it is considering cutting its dividend to save cash. We cut our target price by $5 to $5, on peer EV/EBITDA and p-e ratios. -L. Braverman, CFA