Stock Picks: Intel, JPMorgan, J&J, Harley-Davidson

Intel (INTC)

Needham rates buy; raises estimates, price target

Needham analyst Y. Edwin Mok said on Oct. 14 that Intel once again beat high expectations in its earnings report released after the close of trading Oct. 13, with its strong third-quarter results and higher guidance. Mok said the company is benefiting from strong demand for retail notebooks and Nehalem servers. With better control of costs and prices, the analyst sees a structural improvement in the company's margin profile. Beyond the near-term, Mok believes the adoption of Microsoft's new Windows 7 operating system will drive a much-needed corporate refresh of PCs in 2010, leading to further revenue growth and substantially higher EPS for Intel.

The analyst raised his non-GAAP earnings forecast for 2009 from 88 cents to $1.06, and his 2010 view from $1.30 to $1.65 on higher revenue and margin estimates. He raised his price target to $28.

JPMorgan Chase (JPM)

Standard & Poor's Equity Research maintains strong buy

S&P Equity analyst Stuart Plesser noted on Oct. 14 that JPMorgan posted third-quarter operating earnings of 80 cents per share, vs. 11 cents one year earlier, 35 cents above his estimate. Plesser said JPMorgan's results benefitted from better-than-expected investment banking results, largely reflecting the tightening of spreads on securities it owns. Credit on loans held continued to deteriorate, with nonperforming loans totaling 2.72% of total loans vs. 2.17% in the previous quarter.

Plesser continues to look for elevated credit provisions through mid-2010, but for credit to improve in the third quarter of 2010. Johnson & Johnson (JNJ)

First Global reiterates moderate outperform

First Global analysts said on Oct. 14 that Johnson & Johnson's overall performance in the third quarter was "quite decent", with the company's reported earnings for the quarter surpassing First Global's forecast, as well as the Wall Street consensus estimate, by a wide margin. Given J&J's diverse revenue stream and management's strong track record, First Global believes that the company's revenue growth will bounce back to its historic levels of 5-7% in 2010.

First Global said that at 13 times estimated 2009 earnings of $4.60, J&J stock trades at a moderate premium to its industry peers, which its analysts think thinks is justified in view of the company's diversified portfolio, strong balance sheet and robust pipeline.

Harley-Davidson (HOG)

Wells Fargo upgrades to outperform from market perform; raises estimates, valuation range

Wells Fargo analyst Timothy Conder said on Oct. 14 that he upgraded Harley-Davidson's stock on his belief that investors have yet to fully appreciate the likely year-end 2009 supply/demand gap that should allow for low single-digits 2010-11 shipment growth and stabilizing used bike prices in the first half of 2010. Conder sees the benefits of a still-evolving lower operating cost structure and a positively skewed profit profile for the company's financial services unit.

The analyst also sees a likely resumption of Harley-Davidson's share repurchase program with excess free cash flow. He raised his $1.32 2010 earnings per share estimate to $1.44 and sets a $2.12 2011 estimate. He raised his $19-$21 valuation range to $30-$32.

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