Stock Picks: Yahoo, Disney

Yahoo Inc. (YHOO)

Kaufman Bros. upgrades to buy from hold; raises price target

Kaufman Bros. Aaron Kessler upgraded Yahoo on Dec. 11, saying its fundamentals are improving and its search engine is doing better than suggested by a leading research firm. Kessler wrote in a note to clients that checks with ad agencies and recent comments by Yahoo executives point to continued improvement in display ad demand and prices in the fourth quarter. He also believes Internet users are clicking more often on Yahoo search ads, counterbalancing a loss of share in the number of searches it attracts.

An expected regulatory approval in the first quarter of Microsoft Corp.'s () deal to take over Yahoo's search engine could also boost the shares by about $2 each, Kessler wrote.

Kessler raised his price target on the stock to $20 from $19. His pricing model excludes the potential effect of the Microsoft deal.

Walt Disney Co. (DIS)

UBS maintains buy; raises price target

Disney shares should outperform those of its media peers over the next twelve months, with an estimated total return of 22% over that period, wrote UBS analyst Michael C. Morris in a Dec. 11 note. He believes investor interest in Disney will rise in the coming months "as enthusiasm for early cyclical stocks wanes and comfort with the stability of core consumer trends stabilizes".

Morris cited three factors for his 2010 view: Disney's attractive valuation, above average growth, and upward revisions to earnings forecasts. He also sees a number of factors driving results in 2011-12 above analyst consensus estimates, including a "robust" film slate featuring Pixar and Marvel films, the launch of two new Disney cruise ships that will more than double capacity, modestly improving park attendance and core advertising trends, the potential for retransmission consent at the ABC Network and stations, and a stronger consumer products pipeline.

The analyst raised his price target on Disney shares to $38 from $33. United Technologies Corp. (UTX)

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

S&P equity analyst Richard Tortoriello said on Dec. 11 that at an investor presentation on Dec. 10, the industrial concern said it expects operating margin increases in all six of its business segments in 2010, despite continued headwinds for its commercial construction and commercial aerospace units. "We see aggressive restructuring in 2009 and less restructure [spending] in 2010, a weaker dollar, military helicopter demand, and improved demand in certain markets driving results," wrote Tortoriello in a note.

The analyst raised his earnings estimate for 2010 by 15 cents to $4.55 per share. He also raised his price target by $7 to $77.

Christopher & Banks Corp. (UTX)

Sterne Agee keeps buy; raises estimates

Sterne Agee analyst Margaret Whitfield said on Dec. 11 that Christopher & Banks' third-quarter earnings forecast was well above expectations, as the women's apparel retailer preannounced earnings per share (EPS) in the range of 19 cents to 21 cents, vs. her forecast of a loss per share of 8 cents and the consensus Wall Street forecast of a 5 cents loss. She noted that comparable-store sales were expected to be down 8.4%, vs. earlier forecasts of declines in the low- to mid-teens percentage range.

Whitfield added that the company has added novelty in themes and textures for its merchandise, and now has a balance between traditional and updated lines, which are being well received. She raised her estimate for the third quarter to EPS of 21 cents from an 8 cents loss, and for fiscal 2010 (ending February) from a loss of 34 cents to a loss of 5 cents. She also hiked her price target to $10 from $8.50.

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