Analyst Picks and Pans: Apple, Accenture, DreamWorks, Avery
UBS Financial upgrades to buy from neutral; raises price target
UBS financial analyst Maynard Um said on Oct. 2 that his upgrade was predicated upon expectations for greater "recurring" iPhone hardware revenue which should drive more visibility into iPhone sales as well as continued iPhone expansion driven by new partnerships. Also, he believes upward revisions to analysts' consensus estimates for Apple earnings are likely, given that the Street has underestimated the company's gross margin potential.
Um raised his $170 price target to $265.
Standard & Poor's Equity Research reiterates hold
Accenture reported August-quarter earnings of $0.63 per share, vs. $0.67 cents one year earlier. S&P Equity Research analysts Dylan Cathers and Jim Yin said the current-quarter earnings figure was one cent below their below their estimate, which excluded a $0.24 restructuring charge.
The analysts lowered their fiscal 2010 (ending August) revenue growth estimate from 2% to a decline of 1%, as they believe the pace of deal growth remains slow, and the size of deals is smaller than in past quarters. The analysts think clients remain reticent to sign the type of larger, more complex deals that Accenture specializes in.
S&P lowered its our fiscal 2010 earnings estimate by $0.08 per share, to $2.67. However, the analysts kept their $40 12-month target price.
DreamWorks Animation SKG (DWA)
Goldman Sachs adds to Americas Conviction Buy List; raises price target
Goldman Sachs analyst Ingrid Chung said on Oct. 2 that she would view any pullback in DreamWorks Animation stock related to merchandising timing issues as an opportunity to add to positions.
The analyst raised her earnings estimates for DreamWorks Animation from $2.31 per share to $2.55 for 2010 and from $2.20 to $2.33 for 2011. She believes her higher, above-consensus 2010 estimate ($2.55 vs. $2.28 the Wall Street consensus) could
prove to be conservative given her relatively low domestic and international attendance expectations for 2010 films, low conversion rates for theatrical attendance to DVD units, and potential upside from a weaker dollar.
Chung also raised her 6-month price target on the shares to $45, based on 18 times $2.50 in normalized earnings per share.
Avery Dennison (AVY)
UBS Financial cuts to sell from neutral; raises price target
UBS Financial analyst Joseph Naya said on Oct. 2 that the firm's latest label & tag survey points to continued difficult near-term environment in that industry, with only gradual volume recovery seen in coming months. Meanwhile, Naya noted that Avery Dennison stock has rallied 30% in the two months since the company posted second-quarter results, outpacing the packaging sector by 23% and the broader market by 25%.
Despite the company's significant operating leverage to improving volumes, and recent cost cuts, the analyst is concerned the stock may be pricing in a rapid rebound in volumes, and could face pressure if such a recovery is slow to materialize. As such, he downgraded the stock, but raised his $26 price target to $30.