Stock Picks: Research In Motion, Continental

Research In Motion Ltd. (RIMM)

Canaccord Adams reiterates buy; raises estimates and price target

Research in Motion's third quarter results, reported after the close of trading Dec. 17, topped Wall Street estimates. Canaccord Adams analyst Peter Misek said on Dec. 18 that the Blackberry maker's shipments, subscribers, revenues, and earnings per share (EPS) all beat his forecasts, but more impressively the company set higher-than-expected fourth-quarter guidance.

Among RIM's third-quarter highlights, in his view, were shipments of 10.1 million units, "above everyone on [the] Street"; subscribers of 4.4 million, also topping all Wall Street forecasts; and the announcement of a new relationship with China Telecom.

Misel noted that RIM's third-quarter revenues of $3.92 billion topped his $3.85 billion estimate, and its $1.10 GAAP EPS beat his $1.07 estimate and Wall'Street's consensus projection of $1.04. In line with the company's view, re haised his $4.26 billion fourth-quarter revenue estimate to $4.32 billion and his $1.25 GAAP EPS forecast to $1.29. He hiked his $90 price target to $95.

Continental Airlines Inc. (CAL)

Stifel Nicolaus downgrades to hold from buy

Stifel Nicolaus analyst Hunter Keay downgraded shares of Continental Airlines on Dec. 18, citing the stock's valuation after he revised earnings forecasts for the fourth-largest U.S. carrier.

"Shares of CAL are trading at 6.9 times 2010 EV/EBITDAR, implying fair value of $19 per share," he wrote in a Dec. 18 note.

Keay noted that shares of Continental have increased 56% since bottoming on Nov. 2, while also significantly outperforming the broader market and the airline industry as a whole. "CAL is a high quality carrier with a strong balance sheet and exposure to the strengthening corporate travel market, but [the] shares appear to be fully valued, in our view," he wrote. Take-Two Interactive Software (TTWO)

Kaufman upgrades to hold from sell; raises estimates, price target

Take-Two Interactive Software Inc., publisher of the "Grand Theft Auto" video games, posted fourth-quarter non-GAAP earnings per share of 9 cents after the close of trading Dec. 17. Kaufman Bros. analyst Todd Mitchell said on Dec. 18 that the figure was modestly ahead of his 5 cents estimate. Mitchell said that following a negative preannouncement earlier in the month, Take-Two shares fell to his $7 price target and since appear to have stabilized. He said did not hear anything on the company's Dec. 17 analyst call that would cause him to change his outlook fundamentally, but he upgraded the shares to reflect recent stock price action.

Mitchell raised his $210 million first-quarter revenue estimate to $221 million, and narrowed his first-quarter non-GAAP loss per share estimate from 58 cents to 45 cents; he also hiked his $1 billion fiscal 2010 revenue estimate to $1.05 billion and widened his 53 cents non-GAAP loss per share estimate to a 54 cents loss. He increased his price target on Take-Two from $7 to $8.

Take-Two increased $1.12, or 14 percent, to $9.37 at 9:59 a.m. in Nasdaq Stock Market trading on Dec. 17 after news that billionaire investor Carl Icahn increased his stake in the company to 11 percent and may seek talks with the company.

Darden Restaurants Inc. (DRI)

KeyBanc Capital Markets reiterates buy Deutsche Bank keeps hold

Darden Restaurants Inc.'s results are gradually improving, analysts said Dec. 18, after the operator of Red Lobster and Olive Garden restaurant chains reported second-quarter profit rose but narrowed its yearly outlook on "sluggish" sales trends.

On Dec. 17, Darden said second-quarter profit edged up 1 percent, but sales in stores open at least one year, a key measurement of a restaurant operator's financial health, fell 4.7 percent. Restaurant sales industrywide have been pressured as consumers eat out less amid the recession.

KeyBanc Capital Markets analyst Brad Ludington said though sales in stores open at least one year fell, it was still better than expected, and added that he was "encouraged" that margins improved.

He reiterated his $43 price target on the stock.

Deutsche Bank analyst Jason West said earnings were holding up relatively well, helped by lower food costs. The stock's favorable share price, he said, is offset by potentially slower-than-expected recover in sales in stores open at least one year.

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