Stock Picks: Apple, Intel, Aetna, H&R Block
Apple Inc.: Broadpoint AmTech analyst Brian Marshall reiterated his buy rating on shares of Apple Inc. (AAPL) on Mar. 9.
In a note, Marshall said the next major catalyst for Apple shares will be the launch of the iPad on Apr. 3. "We believe the general consensus (i.e. select media outlets) view of this device and its potential is overly pessimistic," Marshall wrote. "We note the vast majority of the naysayers have not yet had the opportunity to use the iPad on a firsthand basis."
Marshall said the "true genius" of the device is its media and content -- such as eBooks, newspapers, magazines, applications, games, movies and TV episodes -- which he believe will be help provide recurring revenues for Apple.
The analyst raised his estimate for calendar 2010 iPad shipments to 4.0 million units from 2.2 million units. He also hiked his calendar 2010 revenue estimate to $57.913 billion from $55.738 billion, and his earnings per share (EPS) estimate to $12.75 from $12.00.
"In our view, Apple remains the best technology company on the planet," Marshall wrote. He raised his price target on Apple shares to $280 from $264.
Intel Corp.: Robert W. Baird analyst Tristan Gerra upgraded a rating on shares of Intel Corp. (INTC) to outperform from neutral on Mar. 9.
In a note, Gerra said that checks with industry sources point to large PC manufacturers recently raising their procurement forecasts for the first half of 2010, in part due to a rebound in corporate PC spending for 2010. "Intel could outperform semiconductor peers this year, notably those with stretched lead times," Gerra wrote. "Should a gradual recovery in true end-demand prolong the current upcycle, INTC shares should benefit as well."
Gerra expects Intel's revenues to rise 15% in 2010, following two consecutive years of revenue declines.
"Intel's valuation is compelling, in our view," Gerra wrote. The analyst raised a price target on the shares to $26 from $24.
Aetna Inc.: Collins Stewart analyst Brian Wright lowered his rating on shares of Aetna Inc. (AET) to sell from hold on Mar. 9.
Wright said in a note that he believes near-term pressure on the shares is likely as he see the consensus estimate of Wall Street analysts of $3.12 EPS for 2010 as "too high". The analyst has a $2.60 EPS estimate for Aetna in 2010.
"We believe consensus estimates assume a greater degree of gross margin improvement in the commercial business than our modest 30 basis points improvement outlook," Wright wrote. His outlook is for "modest" improvement, based on continued pricing pressures and a cost trend that has accelerated in 2009.
The analyst established a near-term target price target of $24 on the shares.
H&R Block Inc.: Oppenheimer analyst Scott Schneeberger reiterated a perform rating on shares of H&R Block Inc. (INTC) on Mar. 9.
On Mar. 8, H&R Block, the biggest U.S. tax preparer, posted a fiscal third-quarter profit that exceeded most Wall Street estimates that were pared after the company said it would miss its 2010 earnings forecast.
Net income rose to $50.6 million, or 15 cents a share, for the period ended Jan. 31, from $47.4 million, or 14 cents, in the same period a year earlier. Profit from continuing operations was 16 cents a share, a penny more than the average estimate of nine analysts surveyed by Bloomberg.
In a Mar. 9 note, Schneeberger said that H&R Block's third quarter EPS from continuing operations of 16 cents exceeded his estimate of 10 cents. "However, the good news ended there," Schneeberger wrote, as "year-to-date tax metrics through Feb. 28 deteriorated from already disappointing YTD performance through Feb. 15". Schneeberger said H&R Block appears on track to lose over a million storefront customers in fiscal 2010 after losing more than 914,000 in fiscal 2009.
Schneeberger also noted that H&R Block management "did not reinstate guidance after pulling it 12 days ago on poor ... YTD results [through Feb. 14]".
The analyst maintains a fiscal 2010 EPS estimate of $1.38 and a fiscal 2011 forecast of $1.52.