Stock Picks: Exxon Mobil, Goodyear, MeadWestvaco

Exxon Mobil (XOM)

Standard & Poor's Equity Research reiterates strong buy; raises estimates, price target

S&P equity analyst Tina Vital said on Oct. 29 that Exxon Mobil posted third-quarter operating earnings per share (EPS) of 98 cents, vs. EPS of $2.58 one year earlier, reflecting lower commodity prices and narrowed margins. Vital said the results were 2 cents below her estimate, reflecting weak U.S. refining results. Oil & gas production rose 2.7% to 3.69 million barrels of oil equivalent (boe) per day on major project start-ups, but was below Vital's estimate; she expects flat growth in 2009 with a ramp-up in 2010.

Vital raised her 2009 operating EPS estimate by 8 cents to $3.88, her 2010 forecast by 8 cents to $5.96, and her 2011 view by 5 cents to $7.50. She increased her 12-month price target by $4 to $88.

Goodyear Tire & Rubber (GT)

Bank of America Merrill Lynch downgrades to underperform from buy; cuts estimates, price target

On Oct. 28, Goodyear reported third-quarter EPS of 30 cents. On Oct. 29, BofA Merrill analyst John Murphy said that following an "okay" third quarter it now appears the fourth quarter will be materially weaker for Goodyear than he expected. He noted, specifically, that a slower recovery of commercial tire volumes pressured the company's sales mix, which now appears likely to persist into the fourth quarter and will weigh heavily on results.

Murphy anticipates a weaker recovery in operating leverage in 2010 and 2011. He widened his 20 cents loss per share estimate for 2009 to a $1.23 loss, cut his $1.75 2011 EPS estimate to 55 cents, and lowered his $2.35 2011 EPS forecast to $1.25. The analyst also cut his $22 price objective to $10.

MeadWestvaco (MWV)

Sterne Agee upgrades to buy from neutral; raises price target

On Oct. 28, MeadWestvaco posted third-quarter EPS from continuing operations of 50 cents. On Oct. 29, Sterne Agee analyst Mark Connelly said the results compared to his estimate of 25 cents and the Wall Street consensus forecast of 27 cents. Connelly said the company's results were strong across all key businesses, mainly driven by another good quarter of cost reduction and improvements in volumes. He upgraded the shares to reflect better consistency of business performance and recent stock weakness.

Connelly said the company's diverse portfolio may not make a lot of strategic sense, but it is delivering well at time when investors are still divided about extent of commodity exposure they want to take on. He raised his $25 price target to $30. Cytokinetics Inc. (CYTK)

Needham & Co. downgrades to hold from buy

Needham analyst Mark Monane said on Oct. 29 that one of the highlights of Cytokinetics' third-quarter conference call was the news that a Phase 2b program initiation for a heart failure drug is delayed until 2011 after discussion with partner Amgen. Due to this delay, and a lack of near-term catalysts from the company's other internal programs and external collaborations, Monane thinks there will be a lack of sentinel events over the next six to 12 months to drive the company's valuation higher. As such, he downgraded the shares.

Monane did note that Cytokinetics ended the third quarter with $119.2 million in cash and investments. With projected 2009 cash burn of $52 million-$57 million, he thinks the company has sufficient cash into 2011.

Agnico-Eagle Mines (AEM)

Credit Suisse downgrades to neutral from outperform; cuts price target

After Agnico-Eagle posted a third-quarter loss, Credit Suisse analyst Anita Soni downgraded the shares on Oct. 29. Soni said she was also cutting her $80 price target to $68. The analyst said she revised her forecast for discounted cash flow (DCF) based on continued start-up issues at each of Agnico's newer mines.

She noted that she made preliminary, but material, revisions to her model based on third-quarter operating results and revised production guidance. She downgraded her opinion on the shares as her revised target would provide insufficient return to maintain outperform rating.

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