Analyst Picks and Pans: Texas Instruments, Safeway, Jabil

Texas Instruments (TXN)

Goldman Sachs raises estimates

Goldman analyst James Covello said on June 9 that Texas Instruments raised its second-quarter revenue guidance to $2.3 billion-$2.5 billion (up 10%-20% quarter-over-quarter), and its EPS outlook to $0.14-$0.22 (including a restructuring charge of $0.05; excluding the charge, the midpoint is now $0.23). Covello believes the increase mainly reflects ongoing supply-driven recovery in the industry, and thinks continued under-shipment relative to end demand should drive continued cyclical recovery. The analyst thinks Texas Instruments is also seeing initial benefits of its efforts to improve its high-volume analog business.

Covello raised his EPS estimates for 2009 from $0.55 to $0.85, for 2010 from $0.90 to $1.10, and for 2011 from $1.10 to $1.20; he also raised his $17 price target to $19.

Safeway Inc. (SWY)

Jefferies & Co. upgrades to buy from hold

Jefferies analyst Scott Mushkin also raised his price target for Safeway on June 9, citing the grocery store operator's improved pricing and traffic.

Mushkin wrote in a client note that stabilizing economic conditions may also help the Pleasanton, Calif.-based company get back on more solid footing.

"Given the tremendous economic challenges the company endured, its higher-end store base and the Blackhawk business, Safeway, in our opinion, should see an outsized benefit if the economy improves," Mushkin wrote.

Mushkin said that the grocery store operator has cut prices, which in turn has led to increased traffic -- "the best indicator that underlining business is improving."

The analyst predicted Safeway could realize 2010 earnings of $2.50 per share.

Mushkin lifted his share price target to $26 from $20.

Jabil Circuit (JBL)

Credit Suisse downgrades to neutral from outperform

Credit suisse analyst William Stein said on June 9 that he downgraded the shares on valuation. He noted that Jabil shares were up 164% from its low on Mar. 9 (pre-open), and are now valued at just under 13 times his $0.66 calendar 2010 EPS estimate and 9 times his view of "normalized" EPS of $0.96. Stein noted that Jabil reports third-quarter (May) results on June 23 after

the market close. He expects the third quarter to approximate his model at $2.6 billion in revenues (-10% from the preceding quarter) and $0.03 EPS. Stein expects Jabil will guide fourth-quarter revenues to flattish from the previous quarter, with EPS up slightly over the preveious quarter on restructuring.

Stein adjusted his model to match management's demand commentary: he cut his $0.33 calendar 2009 EPS estimate to $0.32 and his $0.69 calenmdar 2010 forecast to $0.66.

Before it's here, it's on the Bloomberg Terminal.