Stock Picks: Allegiant Travel, Corning, Tenet Healthcare
Allegiant Travel (ALGT) Jesup & Lamont downgrades to hold Jesup & Lamont Securities analyst Helane Becker downgraded Allegiant Travel, the parent of Allegiant Airlines, to hold from buy "as the shares have hit our price target and we do not see a short term catalyst for raising our price target." Becker issued a target price in May 2009 of $48, and the stock closed at $48.84 on Dec. 22. The analyst also issued per-share earnings for 2010 of $4.50, ahead of the Wall Street consensus of $3.96, because of an expected increase in leisure and convention travel next year to Las Vegas, Allegiant's home airport and primary hub. While Allegiant will face a need in coming years to replace its aged MD-80 fleet, Becker said in her Dec. 23 note that older replacement aircraft should not be difficult to source. Corning (GLW) ThinkEquity upgrades to buy, raises estimates, price target Corning stands to benefit from a robust LCD flat-panel television market in 2010 and 2011 as supplies are balanced, with inventories likely low at Samsung, LG Display (LPL), and Taiwan's AU Optronics (AUO), ThinkEquity analyst Vijay Rakesh said on Dec. 23. Lower inventories plus "better-than-expected holiday sell through" should lead to firmer pricing for panel makers, Rakesh says. ThinkEquity raised its 2010 sales projection to $6.57 billion from $6.14 billion and its per-share income target to $1.65 versus the consensus of $1.62. For 2011, the analyst expects $2.01 earnings per share. Rakesh raised his price target on Corning to $26. Tenet Healthcare (THC) Leerink Swann upgrades to outperform from market perform, raises price target range The likely passage of health-care reform in the Senate should benefit hospital operators such as Tenet Healthcare in Dallas, which has improved its margins and financial performance this year, Leerink Swann analyst Jason Gurda said in Dec. 23 note to clients. "While the stock has already locked in significant gains during 2009, we believe it can continue to gain as THC narrows the gap between its EBITDA margin and the industry average, and healthcare reform addresses longer-term bad debt concerns." Although the expanded coverage won't begin until 2014, Gurda says the hospital sector could see 100 to 200 basis points of margin improvement from more people having health coverage. He has raised his valuation on Tenet shares from a range of $6-$8 per share to $7-$8.
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