Picks of the Week: Comcast, Cisco, NYSE, Visa

Notable Wall Street analyst opinions on stocks in the news for the week of Feb. 1-Feb. 5:

Feb. 1

Comcast Corp. (CMCSA)

Kaufman Bros. reiterates hold

Kaufman Bros. analyst Todd Mitchell said on Feb. 1 that he looked for cable operator Comcast to report "muted" quarterly results on Feb. 3, against "surprisingly strong" comparisons one year earlier. Mitchell said in a note that he thinks Comcast will issue guidance for total revenue and EBITDA growth in 2010 of 3% to 5%, "pretty much in line" with 2009 results.

"Moreover, whereas 2009 got progressively worse over the four quarters of the year,

2010 should be progressively stronger," he wrote. The analyst expects Comcast's capital expenses will fall again in 2010 for another year of "solid" gains in free cash flow.

With the company's planned acquisition of a controlling stake in NBC Universal likely to take nine more months to close, Mitchell said he thinks investor capital "is best deployed elsewhere".

"NBC's tail is wagging Comcast's dog, as Comcast's valuation becomes increasingly dictated by sentiment on NBCU," he wrote.

The analyst has a $17 price target on the shares.

Mattel Inc. (MAT)

Caris & Co. upgrades to buy from hold; raises estimates, price target

Caris & Co. analyst Linda Bolton Weiser upgrades her rating on shares of Mattel, the world's biggest toymaker, on Feb. 1. In a note, Weiser said a 2% decline in the shares on Jan. 29, after the company released strong fourth-quarter results, was "overdone". The decline provided investors an entry point into the stock "ahead of two years of double-digit EPS growth", she wrote.

Weiser noted that Mattel had not had higher than 2% organic local currency sales growth since 2006, but she projected "at least" 4%-5% growth in 2010 and 2011, driven by a return to growth for the company's Barbie franchise and revenue from products tied to several "sizable" movie licenses.

The analyst raised her 2010 earnings per share (EPS) estimate by 14 cents to $1.59, her 2011 EPS projection by 15 cents to $1.75, and her price target to $26 from $24.

Feb. 2

Exxon Mobil Corp. (XOM)

UBS Securities keeps neutral; lowers price target

Exxon Mobil Corp., the largest U.S. company, posted a smaller decline in fourth-quarter profit than analysts estimated on Feb. 1. Net income fell 23% to $6.05 billion, or $1.27 a share, from $7.82 billion, or $1.54, a year earlier.

UBS Securities analyst William Featherston maintained a neutral rating on the shares on Feb. 2. He said in a note that the company's earnings per share (EPS) of $1.27 exceeded the Wall Street consensus estimate of $1.19 and the UBS projection of $1.12 on lower than expected corporate expense and a lower tax rate.

"After underperforming throughout 2009, XOM lagged peers by another 600 basis points after disclosing the XTO acquisition" in December, the analyst wrote. "In the wake of being oversold, today's better than expected EPS ... coupled with better organic upstream growth in 2010 should firm XOM's relative share performance."

Featherston said Exxon's large valuation premium relative to its peers and the S&P 500 index warranted a neutral rating. He reduced his price target on the shares to $72 from $75.

Lexmark International Inc. (LXK)

Standard & Poor's Equity Research maintains buy; raises estimates, price target

Lexmark International Inc., the second-largest U.S. printer maker, posted fourth-quarter revenue of $1.07 billion on Feb. 2, topping analysts' projections. Net income in the fourth quarter more than tripled to $59.8 million, or 76 cents a share, from $18.1 million, or 23 cents, a year earlier. Excluding 40 cents of restructuring and other charges, earnings per share (EPS) were $1.16. The company said it expects first-quarter earnings will be at least 80 cents a share.

S&P equity analyst Thomas Smith maintained a buy rating on the shares on Feb. 2. Smith said fourth quarter EPS excluding charges was well above his 60 cents estimate. He noted that revenue fell 1% from a year ago, but rose 12% from the previous quarter as customer demand accelerated following a printer industry downturn.

Smith said he expects improving industry conditions through 2010, with margins widening based on new products, higher volumes, and cost reduction programs. He raised his operating EPS estimate to $3.20 from $2.40 for 2010, and raised his 12-month price target to $35 from $31.

Feb. 3

Time Warner Inc. (TWX)

Standard & Poor's Equity research keeps buy

Time Warner Inc., owner of the Warner Bros. studio and the HBO cable channel, posted fourth-quarter profit that topped analysts' estimates on Feb. 3. Net income of $627 million, or 53 cents a share, compared with a loss of $16 billion, or $13.41, a year earlier. Excluding items such as costs to cut magazine jobs, profit rose to 55 cents, beating the 52-cent average of analysts' estimates compiled by Bloomberg.

S&P equity analyst Tuna Amobi kept a buy rating on Time Warner shares on Feb. 3. Amobi said that the company's fourth-quarter earnings per share (EPS) from continuing operations of. 55 cents (before 4 cents in charges), vs. 19 cents one year earlier, was 2 cents shy of S&P's estimate and 4 cents over the Wall Street consensus forecast. The company's studio operations were "solid as expected", said Amobi, mainly on home video sales of Harry Potter and the Half-Blood Prince and The Hangover. The company's TV networks were "mixed", hed added, but the publishing unit appeared to reap some gains from restructuring efforts

Amobi said that Time Warner issued guidance for growth at a mid-teens percentage rate in 2010 adjusted EBITDA, and raised its quarterly dividend by 13% to an annual rate of 85 cents; the company also raised its share buyback capacity to $3 billion from $1 billion. "Added to sizable financial capacity, we also infer management's increased confidence in underlying business trends," said Amobi.

Polo Ralph Lauren Corp. (RL)

UBS keeps buy

Shares of Polo Ralph Lauren Corp., the designer of Chaps and Club Monaco clothing, fell the most in a year on Feb. 3 after reporting a 0.6% drop in third-quarter revenue to $1.24 billion. The company said sales for the year ending April 3 would fall in the "low single-digit" range in percentage terms, compared with an earlier projection for a "mid-single-digit" decline.

Polo fell $7.10, or 8.3 percent, to $78.57 at 10:23 a.m. in New York Stock Exchange composite trading, after earlier dipping to $78.21 for the steepest drop since January 2009. The shares jumped 78% last year.

UBS analyst Michael Binetti kept a buy rating on Polo shares on Feb. 3, noting that its third-quarter EPS of $1.10 beat his $1.04 estimate and the Wall Street consensus forecast of $1.01; he said he thinks investors "were looking for $1.20 or more". Binetti said he believes the mixed quality of third-quarter results could present a stock buying opportunity for what he still views as "one of the most compelling 1-2 year global growth stories in large-cap apparel".

Binetti said his current model for Polo sees EPS of $4.37 in fiscal 2010 and $4.81 in fiscal 2011. He said he would revisit his model after the company's 9:00 am ET conference call on Feb. 3. He has a $92 price target on the shares.

Feb. 4

Cisco Systems (CSCO)

Oppenheimer reiterates outperform

Cisco Systems Inc., the world's biggest maker of networking equipment, reported quarterly earnings on Feb. 3 that topped analysts' estimates and predicted an acceleration in sales growth as customers resumed projects they put off during the recession. Second-quarter net income rose 23% to $1.85 billion, or 32 cents a share, from $1.5 billion, or 26 cents, a year earlier. Sales climbed 8% to $9.82 billion in the period, which ended Jan. 23.

Cisco expects third-quarter sales to rise 23% to 26% from a year earlier. That equates to revenue of at least $10 billion, topping the average analyst estimate of $9.49 billion.

Oppenheimer analyst Ittai Kidron reiterated an outperform rating on Cisco shares on Feb. 4. The analyst said in a note that the company delivered stronger than expected second-quarter results, with year-over-year sales growth for the first time in four quarters.

Kidron noted that Cisco benefited from strong demand across nearly all regions and segments, with product orders up 11% year-over-year. The analyst said Cisco has refocused on driving growth, noting its plans to hire 2,000-3,000 employees to support its strategic initiatives.

"We're encouraged by Cisco's ability to swiftly right the ship and expect it to capitalize on its momentum," wrote Kidron.

Visa Inc. (V)

Raymond James upgrades to strong buy from outperform; raises estimates, price target

Visa Inc., the world's biggest payments network, posted a 33% gain in fiscal first-quarter profit after the close of trading Feb. 3 as consumers used credit and debit cards instead of cash and spending picked up. Net income for the three months ended Dec. 31 advanced to $763 million, or $1.02 a share, from $574 million, or 74 cents, a year earlier.

On Feb. 4, Raymond James analyst Wayne Johnson upgraded his rating on Visa shares to strong buy from outperform. He said in a note that Visa posted "surprisingly strong" transaction volume results, particularly in debit cards.

"Revenues are growing faster and sooner than expected and cost controls are better than modeled," he wrote. Johnson noted that the company reiterated guidance for EPS growth of over 20% in 2010 and 20% in 2011.

The analyst raised his 2010 estimates for revenue by $210 million to $7,878 million (up 14% year-over-year) and EPS by 32 cents to $3.74 (up 20%). He hiked his 2011 estimates for revenue by $400 million to $8.8 billion (up 11%) and EPS by 58 cents to $4.51 (up 21%).

Johnson also raised his 12-month price target on the shares to $112 from $85.

Feb. 5

NYSE Euronext (NYX)

Piper Jaffray maintains underweight; lowers price target

Piper Jaffray analyst Robert Napoli maintained an overweight rating on shares of NYSE Euronext, owner of the largest U.S. stock exchange, on Feb.5 in advance of the company's fourth-quarter earnings release on Feb. 9.

The analyst lowered his fourth-quarter earnings per share (EPS) estimate by 4 cents to 48 cents primarily on his expectation of higher expenses for the company, in line with the Wall Street consensus view. He maintained his estimates of $2.21 for 2010 and $2.52 for 2011.

"We believe NYX continues to make progress with its new initiatives and acquisitions, but meaningful success remains elusive and industry pressures, albeit moderating, remain intense," wrote Napoli in a note. "Consequently, we have a hard time seeing positive revenue and earnings growth momentum in the near-term which we need to get to be more bullish on NYX".

The analyst also said the regulatory environment, both domestically and internationally, continues to be "very unsteady" for securities exchanges.

Napoli reduced his price target on the shares to $22.

Aetna Inc. (AET)

Standard & Poor's Equity Research maintains hold

Aetna Inc., the third-largest U.S. health insurer, posted fourth-quarter operating EPS of 40 cents, vs. 96 cents one year earlier, on Feb. 5. Revenues rose 9% from the prior year. The company forecast 2010 earnings excluding some items will drop to a range of $2.55 to $2.65 a share, missing the average estimate of $2.84 a share in a Bloomberg survey of analysts.

S&P equity analyst Phillip Seligman maintained a hold recommendation on Aetna shares on Feb. 5. He said that the company's fourth-quarter operating EPS was in line with his expectation. Seligman noted that Aetna's healthcare operating revenue rose 9% on 7% growth in medical policy membership, while the commercial medical loss ratio (MLR) rose less than he expected on lower flu costs and higher premium yields. For 2010, Seligman said Aetna sees fewer medical members starting Jan. 1, but "we are encouraged [the] decline is less than it expected."

The analyst said he sees a lower commercial MLR on better underwriting, but expected pressure in general and administrative expenses from competitive pricing in the self-funded medical insurance business, higher compensation expense, and internal investment. He kept his 2010 EPS estimate of $2.60 and $33 price target.

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