Analyst Picks and Pans: Intel, Yum Brands, 3PAR

Intel Corp. (INTC)Barclays raises estimates, price target

After the close of trading July 14, Intel posted better-than-expected second-quarter earnings of $0.18 per share (non-GAAP). Barclays analyst Tim Luke said on July 15 that Intel delivered strong second-quarter results ahead of already elevated investor expectations for sales and margins. He said the $8 billion in reported revenue was up 2% quarter-over-quarter, well above Wall Street's $7.3 billion forecast and high-end expectations at $7.5 billion-$7.6 billion. Luke also noted Intel's 51% gross margins, vs. the 46% Street consensus, and its $0.18 EPS (excluding the fine it paid to the European Commission) vs. the $0.08 consensus.

Luke raised his $0.54 2009 EPS estimate to $0.81, and his $0.90 2010 estimate to $1.15. He also hiked his $18 price target to $19, and maintains an equal-weight rating on the shares.Yum Brands (YUM)UBS maintains buy

UBS analyst David Palmer said on July 15 that Yum's $0.50 second-quarter EPS came in $0.07 above the Wall Street consensus on a favorable tax rate. But despite the upside, Yum kept its 2009 view at $2.10 EPS. Palmer said this is a mild disappointment, and believes it reflects a sobering top-line in the U.S., and, to a lesser degree China. Palmer thinks China same-store sales are gradually improving due to easing comparisons rather than a rebound in consumer demand. The analyst notes input cost relief has been supporting earnings, but not enough for an upward revision to guidance.

Palmer maintains a $38 price target, 16 times his $2.39 2010 EPS estimate.

3PAR Inc. (PAR)Merriman Curhan downgrades to neutral from buy

Merriman Curhan analyst Alex Kurtz said on July 15 that after a disappointing first-quarter preannouncement, "flattish" guidance for September, and what looks like increasing competitive pressures from EMC (EMC), he expects 3PAR's stock price to be range-bound near-term in the $7.75-$8.25 range. He still believes 3PAR's platform provides a key alternative high-end platform to larger incumbents. Yet the company's lack of profitability and limited growth prospects in fiscal 2010 (ending March) argue for a more in-line enterprise value-to-sales multiple with the company's peer group.

Kurtz cuts his $0.15 fiscal 2010 EPS estimate to $0.02.

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