Analyst Picks and Pans: GLW, ORLY, AZO, CRA, UA

Corning Inc. (GLW)

Citi Investment Research upgrades to buy from hold

In a note to clients Mar. 22, Citi Investment Research analyst Jim Suva noted that the shares are up significantly from November lows, when the stock dipped briefly below $8. But he predicted "a strong uptick" in production, driven first by restocking among retailers and then customer demand.

He said his checks show "relatively healthy" LCD TV sales and little risk of a glut in supply.

"While the economy continues to be difficult, our checks indicate that panel maker inventory is unsustainably low," Suva said.

O'Reilly Automotive Inc. (ORLY)

AutoZone Inc. (AZO)

UBS downgrades each to neutral from buy

UBS analyst Brian Nagel wrote in a Mar. 23 note that he's increasingly concerned with nearer-term prospects for leading auto parts retail stocks. Nagel notes that over the past several months, the group has capitalized upon weak new car sales, declining gas prices, and waning consumer confidence.

However, he believes the shares now largely reflect the benefits of a more accommodative environment and are susceptible to an unfavorable multiple resetting should the rate of improvement in trends slow and/or focus of investors shift further to stocks more leveraged to economic recovery.

Celera Corp. (CRA)

Thomas Weisel Partners upgrades to overweight from market weight

Though Thomas Weisel analyst Peter Lawson raised his rating on shares of Celera, he lowered his share price target to $10.50 from $11.50.

"We believe that diagnostic companies are better able to withstand economic downturns compared to equipment makers, with multiples the last to compress and the first to expand out of a recession," he wrote in a note to investors.

He said Celera is the deepest value diagnostic name even after accounting for a worst case scenario. Furthermore, he said, the company's revenue stream is likely safe because of government reimbursement and the likelihood that the company will place more customers under contract.

Under Armour Inc. (UA)

Caris downgrades to below average from average

In a Mar. 23 note to clients, Caris analyst Claire Gallacher said that consensus estimates assume a 10% revenue increase and 6.5% growth in earnings per share for Under Armour, both of which she said were too optimistic.

Gallacher estimates sales will increase 1% and earnings per share will remain relatively flat at 76 cents vs. the 77 cents reported in 2008.

Clothing retailers have suffered amid the widespread contraction in consumer spending during the recession. Gallacher expects a 3% decline in clothing sales in 2009 and 1% growth in shoe sales.

"Given the 75% to 80% mix of apparel revenue vs. footwear and accessories, Under Armour is highly exposed to the apparel segment," the analyst said.

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