Stock Picks:, Capital One, RightNow

Plus Wall Street analyst opinions on SunPower and Bottomline Technologies (AMZN)

Janney Montgomery Scott upgrades to buy from hold; raises estimates, target price

Shares of Inc. rose on Oct. 23 after the company Amazon blew away Wall Street's forecasts by posting a 69% increase in third-quarter earnings on sales of $5.45 billion in a report released after the close of trading Oct. 22.

Janney analyst Shawn Milne upgraded Amazon on Oct. 23. He sees Amazon continuing to gain market share despite tough competition from online sites such as eBay Inc. (EBAY).

He said the company has a good handle on costs, which will drive up earnings. Milne expects Amazon to post annual earnings growth of 25% over the next two to three years. The analyst raised his price target for Amazon shares to $135 from $82.

Milne also raised his fiscal 2009 sales and earnings estimates to $23.8 billion and $2.57 per share, respectively, from $22.6 billion and $2.38. For fiscal 2010, he raised his sales forecast to $28.6 billion from $26.5 billion and earnings of $3.10 from $2.75. The analyst's new estimates exceeded Wall Street's consensus forecasts.

Capital One Financial (COF)

Standard & Poor's Equity Research maintains buy; raises price target

S&P equity analyst Stuart Plesser said on Oct. 23 that Capital One posted third-quarter operating earnings per share (EPS) of $1.03, in line with last year's figure, and $1.11 above his estimate. Plesser said results benefited from an increase in net interest income reflecting a low interest rate environment, and higher non-interest income. Although chargeoffs increased in the third quarter, the rate of increase has decelerated and Plesser thinks they are manageable, particularly in light of Capital One's "solid" capital levels.

Plesser reduced his loan-loss provision estimates and now looks for 2009 EPS of 80 cents, vs. a previous loss of $1.19. He raised his price target by $6 to $48.

RightNow Technologies (RNOW)

William Blair upgrades to outperform from market perform; raises estimate

William Blair analyst Laura Lederman aid on Oct. 23 that RightNow is "a better and different company" than it was a year ago; it is now a material competitor in the call-center space. This service helps companies lower customer-support cost by managing inbound and outbound call volumes, explains Lederman, and replaces outdated call-center systems with more effective on demand model. The analyst said the call-center space is in an upgrade cycle and RightNow is a leading vendor.

Lederman raised her 2009 pro forma EPS estimate to 34 cents from 31 cents. She believes there is upside to Wall Street's 2010 revenue estimates.

SunPower (SPWRA)

RBC Capital downgrades to sector perform from outperform

RBC Capital analyst Stuart Bush said on Oct. 23 that SunPower's $466 million in third-quarter revenue and 42 cents non-GAAP EPS compare to his respective $451.7 million and 43 cents estimates. He noted that SunPower reported a 20.7% gross margin vs. his 23.6% estimate. The analyst believes faster degradation of German solar subsidies in 2010 and continued delay in a U.S. climate bill will buffer demand growth near-term, setting up the company for further price and margin pressure.

Buh said SunPower's "flattish" fourth-quarter guidance, unclear end markets, and likely margin pressure in 2010 give him pause; he believes EPS growth expectations could disappoint. He cut his $1.29 2009 operating EPS estimate to $1.21, and his $2.21 2010 forecast to $1.65.

Bottomline Technologies (EPAY)

Needham upgrades to strong buy from buy

Needham analyst Jonathan Maietta said on Oct. 23 that Bottomline's $36.6 million in first-quarter revenue and non-GAAP EPS of 27 cents topped his respective estimates of $34.4 million and 18 cents; the Wall Street consensus forecasts were $35.5 million and 18 cents. Maietta noted that orders and backlog were strong, up 4.7% and 9%, respectively, year-over-year; each of these metrics provides the company with significant revenue visibility, he said. The analyst remains "excited" about Bottomline's acquisition of PayMode from Bank of America, which closed Sept. 14. He said PayMode creates another high visibility revenue stream for the company.

Maietta raised his fiscal 2010 (ending June) pro-forma EPS estimate from 74 cents to $1.00, and hiked his $14 price target to $18.

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