Analyst Picks and Pans: Boeing, TiVo, Harley-Davidson, Jackson Hewitt

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

Boeing (BA)

S&P Equity Research upgrades to buy from hold

Boeing announced Thursday that the first flight of the 787 Dreamliner is expected by the end of 2009 and first delivery is expected to occur in fourth quarter 2010.

"We believe [the] new schedule provides strong cushion for flight certification, while providing customers with firm target," wrote S&P Equity Research analyst Richard Tortoriello in a note. He upgraded the stock to buy from hold on the news.

Boeing expects the program to be profitable, but also expects a $2.5 billion ($2.21/share) non-cash third quarter charge to write off initial test planes.

"As we see significant uncertainty removed from the shares," wrote Tortoriello, he raised his target price for Boeing shares by $14 to $60. His new target price is based on an enterprise value to EBITDA multiple of 7, about in line with current valuation ratios for commercial aerospace peers, he said.


Janney Montgomery Scott reiterates buy

TiVo Inc. is set to gain from new deals with cable operators, international growth, digital video recorder advertising and a possible stream of cash from a lawsuit, a Janney Montgomery Scott analyst said Thursday. Analyst Tony Wible reiterated a buy rating for the DVR maker.

On Wednesday, the Alviso, Calif.-based company reported a narrower second-quarter loss than Wall Street expected. But that news was overshadowed by the company's legal wrangling, Wible told clients in a note.

TiVo sued AT&T (T) and Verizon (VZ) on Wednesday, claiming patent infringement related to its DVR technology.

The suits came on the same day as a setback for the company in a similar case against Dish Network Corp. (DISH). The U.S. Patent and Trademark Office said a review that Dish requested of TiVo's disputed patent may go forward after TiVo asked it be discontinued.

Still, Wible noted that if a previous ruling against Dish is upheld in appeal, Dish "should supply a sizable new annuity stream and cash damages."

He added that the new legal claims against AT&T and Verizon "are ultimately a sign that TiVo is confident in its legal position and are also a potential harbinger for new cable deals."

He has a $16.50 price target on TiVo shares.

Harley-Davidson (HOG)

Baird reiterates outperform

Baird's Craig Kennison reiterated his outperform rating on Harley-Davidson shares. In a note, he said retail sales appear to be down 25% to 30% during the quarter, though some dealers reported an uptick in August, Kennison said. He cited a Baird survey of 70 Harley dealerships.

Although demand for the company's high-end motorcycles remains soft, Kennison said dealers and investors have a positive view of the company's new CEO, Keith Wandell, who took over the job in May. Dealers surveyed highlighted Wandell's "straightforward approach," Kennison said. "Meanwhile, automotive investors that know Mr. Wandell consider him a 'world-class operator' and see an opportunity in Harley."

Harley has been grappling with falling profits as consumers put off sales of the company's high-end bikes during the recession. The company reported a 91% drop in second-quarter profit last month.

Earlier Thursday, Harley announced it would begin selling motorcycles in India next year. International sales have been a growing part of the company's business amid flagging sales at home.

In 2008, motorcycle shipments in the U.S. fell 15% to 206,000 units while international shipments climbed 9% to 97,107.

Jackson Hewitt Tax Service (JTX)

Oppenheimer downgrades to perform from outperform

An Oppenheimer analyst downgraded tax return preparer Jackson Hewitt Tax Service Inc. on Thursday, citing a big jump in the stock price this summer and upcoming fiscal first-quarter results that may disappoint investors.

Jackson Hewitt reports its first-quarter results on Sept. 3. If the company doesn't lay out some meaningful benefits from a "strategic alternatives" exploration that began in early June, shares may drop, wrote analyst Scott Schneeberger in a note.

He lowered his rating to perform from outperform.

In early June, Jackson Hewitt hired a new CEO, Harry Buckley, a former chief executive of larger rival H&R Block Tax Services Inc. (HRB), amid a double-digit decline in tax returns it prepared this year and lower profits. At the same time, Jackson Hewitt brought on a management consulting firm and investment bank Goldman Sachs (GS) as a financial adviser to "examine a range of strategic alternatives" for the struggling company.

The stock has risen 54% since then, and has surged 83% in the last three months.

Schneeberger also cautioned that Jackson Hewitt's deal with Wal-Mart Stores Inc. (WMT) to provide tax services in about 1,050 new stores is getting a "mixed reaction" from the franchisees. A slow rollout may worry investors on the company's execution ability, and the cost of the rollout makes him less confident in his earnings estimates, he said.

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