Stock Picks: Disney, Jabil Circuit, Liz Claiborne
Walt Disney Co. (DIS)
Standard & Poor's Equity Research keeps buy
S&P equity analyst Tuna Amobi said in a Dec. 22 note that Disney and CBS Corp. (CBS) could be among the initial content partners for a new online TV subscription service for 2010 launch by Apple Inc. (AAPL), based on an unconfirmed Wall Street Journal story. Amobi thinks the news underscores the confluence of online video strategies, as "entertainment content providers stake some claim in evolving digital landscape".
Added to the planned launch of Disney's own subscription service, and its Hulu internet video joint venture with News Corp. (NWS) and General Electric Co. (GE) NBC, "the news could complicate relations with major content providers", said Amobi.
Jabil Circuit (JBL)
Needham keeps buy; raises estimates, price target
Jabil Circuit's first quarter results, released after the close of trading Dec. 21, topped Wall Street forecasts. Needham & Co. analyst Sean Hannan said on Dec. 22 that the maker of circuit board assemblies reported $3.1 billion in first-quarter revenues, at the mid-point of the company's guidance, while its 32 cents non-GAAP earnings per share (EPS) were at the high end of its guidance. Hannan's estimates had been $3.1 billion and 29 cents, respectively.
Hannan said that Jabil continues to show "diligent execution" within its business, as the broader economy slowly improves from its recent downturn.
The analyst raised his $1.01 fiscal 2010 (ending August) EPS estimate to $1.22, and his $1.27 EPS forecast for fiscal 2011 to $1.38; he also hiked his $16 price target to $19.
Liz Claiborne (LIZ)
KeyBanc Capital Markets initiates coverage with hold
KeyBanc analyst Edward Yruma initiated coverage on Liz Claiborne with a hold recommendation on Dec. 22, saying that while he sees significant upside potential at the women's apparel company should it be able to complete its transformation, he believes the risk profile remains "exceedingly high".
"The risk profile leaves us somewhat disconcerted, as the business attempts another transformation while grappling with high financial leverage," wrote Yruma in a note.
Yruma thinks the recent moves to license the Liz Claiborne brand to JCPenney and QVC -- and realign the company around four key brands (Juicy, Kate Spade, Lucky and Mexx) will be accretive to 2010 results, noting that the company believes it can drive at least $165 million in additional selling, general and administrative expense savings. "Nevertheless, earnings are likely to remain negative during 2010, and patience with management is running thin as it has not demonstrated an ability to drive an operational turn in the business," he wrote.