Analyst Picks and Pans: AXP, CBG, BX, EAT

What Wall Street analysts are saying about selected stocks in the news Wednesday

American Express (AXP)

JPMorgan resumes coverage with underweight, $10.50 target price

In a Mar. 25 research note to clients, JPMorgan analyst Andrew Wessel said he expects chargeoffs, or loans written off as unpaid, to increase well into next year as cardmembers battle ongoing economic challenges. While Wessel believes the credit card lender will remain profitable through the period, significant earnings growth is not likely until sometime in 2011, he said.

Wessel estimates earnings of 50 cents per share in 2009. Analysts polled by Thomson Reuters, on average, expect earnings of 93 cents per share for the full year.

"We view American Express as overvalued given the revenue and credit pressures it is facing," wrote Wessel. He added that Capital One Financial Corp. (COF) seems to be better positioned, with fewer chargeoffs and a more diversified banking model.

CB Richard Ellis Group (CBG)

JPMorgan upgrades to overweight from neutral

JPMorgan analyst Anthony Paolone said in a Mar. 25 client note the risk of a debt covenant being busted, which could create earnings per share and liquidity uncertainty, appears to be addressed with the real estate firm's amended credit agreement. Paolone is hopeful that 2009 EPS will mark a trough in the company's business, but notes the commercial real estate environment continues to weaken considerably.

Nonetheless, the analyst has tried to incorporate very weak operating assumptions, and has come to the conclusion that the risk/reward and

upside/downside in the stock is attractive. He has a $7 price target.

Blackstone Group (BX)

KBW downgrades to market perform from outperform

Analyst Robert Lee of Keefe, Bruyette & Woods said in a Mar. 25 note to investors that the Treasury Dept.'s recent Public Private Investment Fund proposals have helped lift Blackstone's stock price. On Mar. 23, the Obama administration announced plans to finance purchases of as much as $1 trillion in toxic assets from banks will include programs supported by the Treasury Department's bailout fund, the Federal Reserve and the Federal Deposit Insurance Corp.

Shares of Blackstone have shot up more than 30% since Mar. 20.

Lee raised his target price on the company's shares by $1.50 to $7.50, praising the consistency of the company's management fee earnings potential.

Brinker International (EAT)

Morgan Keegan positive on restaurant price cuts

Morgan Keegan analyst Destin M. Tompkins said in a Mar. 25 note to investors that "in order to pull consumers off the couch and into casual dining chain restaurants, a number of the industry's biggest chains are pricing aggressive deals to improve traffic trends."

Tompkins noted that Brinker's Chili's Grill & Bar chain is now offering meals priced under $7. A number of casual dining chains have begun cutting menu prices to entice more consumers -- weary of spending money during the recession -- through the doors. Most chains have seen sales and traffic fall as the recession has deepened and unemployment has jumped.

The analyst said even though lower menu prices can sometimes hurt margins, commodity costs are trending lower. If ingredient costs drop, that may "provide some opportunity for chains to discount without significantly hurting bottom line results," Tompkins said.

If more consumers take advantage of deals and promotions, Brinker could see a better-than-expected lift in traffic, he added. Tompkins has a market perform rating on the stock.

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