Stock Picks: Google, Research In Motion

Google (GOOG)

Standard & Poor's Equity Research reiterates hold

S&P equity analyst Scott Kessler noted on Dec. 24 that Google, in a posting on its Public Policy Blog, disclosed a "second request" from the FTC regarding its proposed acquisition of mobile advertising company AdMob. "This indicates the government is closely reviewing this pending purchase, said Kessler.

Although Google does not see any related regulatory issues with the deal and expressed confidence in consummation, noted Kessler, it acknowledged closure would take longer than initially expected.

"We are now not sure whether this deal will close, said Kessler, and he thinks "government actions will hamper GOOG in the new year".

Research In Motion Ltd. (RIMM)

Kaufman Bros. reiterates buy

Kaufman Bros. analyst Shaw Wu said in a Dec. 24 bulletin that checks he conducted on Dec. 23 indicated that Research In Motion had fixed various network issues that had affected service for the company's BlackBerry product over the preceding days. Wu said the issue may be tied to different versions of BB Messenger, a popular texting and social networking application; RIM recommended that users upgrade to the newest version of the program.

Wu believed that concerns about the network problems were "overblown" and said he would take advantage of recent weakness in RIMM shares. "We continue to believe investors underestimate RIM's fundamental advantages including its push network technology and ownership of core hardware and software," he wrote.

The analyst has a price target of $93 on the shares.

PG&E Corp. (PCG) Jefferies & Co. reiterates buy; raises estimate, price target

Jefferies analyst Paul Fremont said in a Dec. 24 note that PG&E Corp. "represents a great [defensive] investment option in the current insecure economic environment, and should trade at a premium to its peer group."

The analyst noted that PG&E filed its 2011 General Rate Case with the California Public Utilities Commission, requesting an increase in gas and electric distribution and generation base revenue requirements by a total of $1.048 billion to $6.688 billion in 2011. Fremont said PG&E's projected 2011 capital spending is near the mid-point of its outlook range of $2.15 billion to $2.7 billion given earlier in the year. A final decision on the request is expected by the end of 2010.

Fremont maintained his 2009 and 2010 earnings per share (EPS) estimates at $3.15 and $3.40, respectively, and raised his 2011 EPS estimate by 5 cents to $3.70. He raised his target price on the shares to $50 from $47.50. Amylin Pharmaceuticals (AMLN)

Leerink Swann reiterates market perform

Leerink Swann analyst Joshua Schimmer said in a Dec. 24 note that Amylin Pharmaceuticals shares were "down hard" on Dec. 23 as the U.S. Food & Drug Administration's supplemental New Drug Application approval letter regarding the company's Byetta compound for treatment of diabetes circulated among investors.

"Clarity on timing and nature of ... approval are equally poor today as they were two days ago, which is what keeps us on the sidelines for the time being," he wrote.

Schimmer remains "reasonably encouraged" that long-acting members of the GLP-1 class of compounds, which includes Byetta, will reach the market in 2010, "but whether the size of the class is sufficient to provide upside to our valuation remains to be seen". The analyst has a valuation on the shares of $12-14, (vs. $12 previously).

YRC Worldwide (YRCW)

Stephens Inc. reiterates underweight

Stephens analyst Jack Waldo said in a Dec. 24 note that his action followed on the heels of the third announcement that YRC Worldwide has not received the required approval for a debt-for-equity swap. "We were surprised with how far off YRCW is from getting USF bondholder approval and view the likelihood of a successful exchange as highly unlikely.

While contingent convertible bondholders have tendered 90% of their bonds (vs. the 85% threshold), bonds tendered by U.S. Freightways holders fell well short of the requirement (53% vs. 70%). "We were surprised how far off YRCW is from getting USF bondholder approval and view the chances of getting to the 70% threshold as a long shot," Waldo wrote. YRC also extended the swap deadline to Dec. 28.

Waldo thinks YRC's best chance of survival is further assistance from its lenders. "Even if the banks provide some liquidity, we think the lost freight [business to other carriers] could be too much to overcome and see a high risk YRCW will be forced to shut its doors in early 2010," he wrote.

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