Stock Picks: FedEx, SanDisk, Fannie Mae, NuVasive
FedEx Corp.: Jesup & Lamont analyst Helane Becker maintained a buy rating on shares of FedEx Corp. (FDX) on Mar. 1.
In a note, Becker said she was increasing her fiscal third-quarter earnings estimates on the second-biggest U.S. package-delivery company from 63 cents per share to 74 cents per share to reflect her view that revenues were better than expected.
She also noted that U.S. gross domestic product grew by a greater than expected 5.9% in the 2009 fourth quarter. "Since FDX touches a significant portion of GDP, we believe they benefited from this strong performance," the analyst wrote.
Becker said a number of other cargo companies reported that business in January and February was better than they expected. "Given FDX's dominant position in the market, we believe they also benefited from the strength so far in the quarter," she said.
Becker cited FedEx's "consistent record of profitability, strong balance sheet and positive growth outlook". She has a $100 target price on the shares.
SanDisk Corp.: Wedbush analyst Betsy Van Hees raised her rating on shares of SanDisk Corp. (SNDK) to neutral from underperform on Mar. 1.
On Feb. 26, the biggest maker of flash-memory cards for digital cameras and phones increased its first-quarter sales forecast to between $925 million and $1 billion.
In a Mar. 1 note, Van Hees said she was "incrementally more positive" on SanDisk given the better-than-expected supply-demand environment for NAND flash memory in the first half of 2010, together with the "significant" strides management made at its Feb. 26 analyst day to increase transparency to investors.
"In an uncharacteristic and very refreshing move SNDK provided to investors an update to its Q1 guidance, further clarity on 2010 revenue outlook and a long-term financial model," the analyst wrote.
Van Hees raised her price target on the shares to $32 from $25.
Fannie Mae: Standard & Poor's equity analyst Rafay Khalid maintained a hold opinion on shares of Fannie Mae (FNM) on Mar. 1.
Fannie Mae will seek $15.3 billion in U.S. aid, the mortgage-finance company said in a Feb. 26 filing with the Securities and Exchange Commission, bringing the total owed under a government lifeline to $76.2 billion, after its 10th consecutive quarterly loss. The mortgage-finance company posted a fourth-quarter net loss of $16.3 billion, or $2.87 a share.
Khalid said in a posting on the S&P MarketScope service that Fannie's fourth-quarter loss was narrower than our $3.80 per share loss estimate, reflecting lower-than-expected loss provisions. Khalid said that while he forecasts that Fannie's loan-loss provisions will decline in 2010, he believes they will remain at elevated levels, reflecting his outlook for stabilizing delinquencies.
The analyst narrowed his 2010 per share forecast by $4.29 to a $10.64 loss. "We think the U.S. government will continue to provide financial support for FNM," Khalid wrote. He kept his 12-month price target of $1.50 on the shares.
NuVasive Inc.: Needham analyst Sameer Harish raised a rating on shares of NuVasive Inc. (NUVA), the maker of surgical treatments for the spine, to strong buy from buy on Mar. 1.
In a note, Harish said health insurers Aetna Inc. (AET) UnitedHealth Group Inc. (UNH) changed their spinal surgery policy to include coverage for the company's eXtreme Lateral Interbody Fusion, or XLIF procedure. Harish said the reversals of coverage policies by Aetna and UnitedHealth remove an overhang on NuVasive; despite evidence that supported continued physician adoption of XLIF, investor concerns over insurance policy decisions caused significant pressure on the shares.
"[T]his puts to rest investor questions about reimbursement," the analyst said.
Harish sees earnings per share of 77 cents in 2010 and $1.27 in 2011 (both pro forma). The analyst set a $60 price target on NuVasive shares.