Analyst Picks and Pans: RIMM, Caterpillar, Terex, McAfee
Research in Motion (RIMM)
Deutsche Bank downgrades to sell from hold; cuts price target Deutsche bank analyst Brian Modoff said on Sept. 25 that RIMM's $3.5 billion second-quarter revenues were below his estimate and the Wall Street consensus view; the Blackberry maker's $1.03 EPS was slightly better than his $0.98 view, and the $1.00 Street consensus, on better-than-expected gross margins and operating expenses. Modoff noted, however, that RIMM guided third-quarter revenues and EPS below his estimates.
Modoff sees mounting competition and weak cashflow as material concerns for RIMM. He said RIMM's new product portfolio appears to offer little that is meaningfully different from existing products.
The analyst cut his $4.11 fiscal 2010 (ending February) earnings estimate to $4.05 per share (including stock option expense). He sees $4.39 fiscal 2011 earnings per share. He cut his $67 price target to $60.
Caterpillar (CAT) Parker-Hannifin (PH) Terex (TEX)
Credit Suisse upgrades each to outperform from neutral
Credit Suisse analyst Jamie Cook upgraded shares of Peoria, Ill.-based Caterpillar Inc., Cleveland-based Parker-Hannifin Corp. and Westport, Conn.-based Terex Corp. on Sept. 25, saying the degree to which the stocks sold off during the current downturn was likely "excessive".
The analyst further said "most companies in the sector should beat consensus expectations based on cost controls and benefits from aggressive restructuring."
Cook also wrote in an analyst note that heavy machinery makers should get a lift from the reviving economy that last through next year.
"With the recent rise in new orders, U.S. industrial production should increase in the near-term providing support for higher volumes. The rebound in Europe is still in its infancy stages, thus providing a possible tailwind in late (2010)."
FBR Capital Markets upgrades to outperform from market perform; raises price target
A strong product cycle and healthy cybersecurity spending should boost McAfee shares higher, FBR Capital Markets analyst Daniel Ives said Sept. 25, upgrading the security software supplier and raising his estimates.
Ives wrote in a note to investors that deal flow was stronger than expected in the last quarter and should continue to improve through the fourth quarter and fiscal year 2010.
Ives praised the company's vast federal reseller network, adding that the distribution channel will help it capitalize and "gain a big slice of the cybersecurity growth pie over the coming quarters (and) years."
Ives raised his price target to $50 from $41. He also lifted his fiscal 2009 estimate to $1.92 billion, or $2.40 per share, from $1.90 billion, or $2.39 per share, and his fiscal 2010 estimates to $2.13 billion, or $2.68 per share, from $2.08 billion, or $2.64 per share.