Stock Picks: Texas Instuments, FedEx

Texas Insruments (TXN)

Kaufman Bros. maintains hold; raises price target

Kaufman Bros. analyst Suji De Silva raised estimates on Texas Instruments on Dec. 9, saying in a Dec. 9 note to clients that the chipmaker's scheduled 2009 mid-third quarter update revealed a more bullish outlook.

Specifically, the analyst said, the company's 2009 third-quarter semiconductor revenue range was narrowed and raised slightly to $2.9 billion-$3.02 billion (and increase of 1%-5% over the previous quarter) vs. prior guidance of $2.78 billion-$3.02 billion (a decline of 3% to +5%). De Silva believes semiconductor growth implied in this guidance (which excludes calculator revenues) represents the third straight quarter of above-seasonal semiconductor growth.

The company's overall EPS guidance range also narrowed and increased slightly, said De Silva; it is now forecast to be 47 cents-51 cents, vs. prior guidance of 42 cents-50 cents).

"We believe TXN's improved outlook matches our recent checks indicating improving visibility and ordering patterns, particularly around key analog end demand markets such as computing, handsets, storage, autos and industrial," the analyst wrote. De Silva raised the firm's 2009 earnings estimate from $1.08 per share to $1.12 per share and its 2010 earnings estimate from $1.73 per share to $1.87 per share, and expects 2009 revenue to be $10.4 billion vs. the prior forecast of $10.3 billion.

The analyst also raised a price target on Texas Instruments from $26 to $28.

FedEx Corp. (FDX)

UBS maintains neutral; raises price target

After the close of trading Dec. 8, FedEx announced that fiscal 2010 second-quarter earnings will come in at $1.10 per share, significantly higher than the prior guidance range of 65 cents-95 cents. UBS analyst Rick Paterson raised estimates on the package-delivery company on Dec. 9.

Paterson said in a note to clients that the upside vs. FedEx's original expectations was driven by better than expected growth in international priority and domestic ground parcel shipments, and cost cutting. He raised earnings estimates for fiscal 2010 (ending May) from $2.99 per share to $3.56 per share and for fiscal 2011 from $4.03 per share to $4.50 per share.

"Our customer surveys show no indications of an inventory restocking on a broad scale, yet," wrote the analyst.

Paterson raised his one-year price target on the shares from $91 to $99. PepsiCo Inc. (PEP)

Standard & Poor's Equity Research reiterates hold; raises price target

S&P equity analyst Esther Kwon noted on Dec. 9 that soft-drink and food company PepsiCo reached an agreement with Dr Pepper Snapple (DPS) to manufacture and distribute certain products after completion of PepsiCo's buyout of Pepsi Bottling and PepsiAmericas. The company will pay Dr Pepper Snapple $900 million upon clsoing of the acquisition, which is expected by the end of the 2010 first quarter.

"We see [the] amount as more favorable to PEP than our previous view," wrote Kwon in a note. She also noted that PepsiCo lowered its 2009 constant currency earnings per share (EPS) growth guidance to 5% to 6%, from the mid- to high single digits. She kept her EPS estimate of $3.73 but raised her target price by $4 to $66.

CA Inc. (CA)

Deutsche Bank upgrades to buy from hold; raises price target

Deutsche Bank analyst Todd Raker upgraded CA Inc. on Dec. 9, saying the business software company is poised to benefit from opportunities in the new technologies of virtualization and cloud computing. Raker also increased his target price on the company's shares to $28 from $22.

Virtualization helps companies save money on power and equipment by enabling a single computer to function like multiple machines. Cloud computing is centered on the idea of running software from remotely hosted computers rather than on the user's own machine.

Raker said that as cloud computing starts to see "significant adoption" by businesses, managing how it is used will become increasingly important. Cloud computing leads to increased service and elevated security requirements for the companies that use them, and CA's "product portfolio is well positioned to benefit," the analyst said.

"We think the Street does not fully appreciate the virtualization/cloud computing management opportunity," Raker added.

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