Analyst Picks and Pans: DIS, PLT, ATML, TRLG

Walt Disney Co. (DIS)

Barclays upgrades to overweight from underweight

Barclays analyst Anthony DiClemente noted on May 6 that Disney's $0.43 adjusted second-quarter earnings per share (EPS ) was $0.02 above his estimate. DiClemente continues to harbor structural concerns on certain subsectors of media, but thinks Disney is best-positioned for media's digital evolution. He noted that DVD sales and ABC are now a smaller component of operating income and valuation. DiClemente said Disney's "second derivative" has stabilized at the Parks business.

The analyst noted that Disney's valuation on normalized EPS is attractive vs. historical ratios, and he prefers to be a long-term owner of the best-in-class global entertainment company. He raised his $1.50 2009 EPS estimate to $1.74 and his $1.59 2010 forecast to $1.95; he also upped his $17 price target to $32.

Plantronics Inc. (PLT)

Baird upgrades to outperform from neutral

Baird analyst Reik Read said on May 6 that Plantronics reported $146.8 million in fourth-quarter revenue, which exceeded his $131.9 million expectation, and EPS of about breakeven, which compared to his $0.21 loss forecast. Read noted that Bluetooth revenue provided most of the upside, with office wireless contributing as well. He added that that expense control indicated Plantronics' restructuring actions are taking hold.

Read sees several catalysts for Plantronics stock, including share repurchases, unified communication rollouts, and a strategic announcement with Altec. He raised his $0.20 fiscal 2010 (March) EPS estimate to $0.58.

Atmel Corp. (ATML)

Broadpoint AmTech owngrades to neutral from buy

Broadpoint AmTech analyst Doug Freedman said on May 6 that Atmel's first-quarter revenue was well below consensus, but EPS beat forecasts from a $27.7 million tax benefit. Freedman downgraded Atmel, noting that the stock reached his $4 target (before the May 6 open), while a deeper revenue trough and deferred recovery pushes out leverage upside from the model and more than offsets recent restructuring actions.

The analyst said Wall Street estimates will likely decline and in the best case stay flat, making it difficult to justify higher valuations, while the ASIC divestiture appears more than partially priced in. Freedman narrowed his $0.01 2009 loss per share estimate to breakeven.

True Religion Apparel (TRLG)

Wedbush raises estimates

Wedbush analyst Jeff Mintz said on May 6 that the company's $0.32 first-quarter EPS beat his $0.28 estimate, as direct to consumer and international strength offset wholesale weakness. Mintz said True Religion stores continue to produce strong sales per square foot. He noted that the U.S. wholesale business is still struggling due to weakness at boutiques, and department store destocking, but he believes the brand is holding its position in this channel.

Based on first-quarter results and his channel checks, Mintz said 2009 results are likely to exceed the company's guidance of $1.73-$1.81 EPS. He raised his $1.81 2009 EPS estimate to $1.91, and his $2.00 2010 forecast to $2.04; he also boosted his $18 price target to $23. He rates the shares buy.

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