Stock Picks: Cablevision, Harley-Davidson, Men's Wearhouse, Shuffle Master
Cablevision Systems: Wunderlich Securities equity analyst Matthew Harrigan maintained a buy rating on shares of Cablevision Systems (CVC) on June 10, with a price target of $33.50.
On June 9, Bloomberg News reported that Cablevision, the fifth-largest U.S. cable operator, is among seven bidders for Providence Equity Partners's Bresnan Communications, citing two people with knowledge of the matter. All the bids are for more than $1 billion, according to one of the people, who declined to be identified because the talks are private.
Bresnan, based in Purchase, N.Y., provides broadband-communication services in Montana, Wyoming, Colorado, and Utah and is 30 percent-owned by Comcast (CMCSA). Bresnan would give its new owner a slice of the market for high-speed Internet services, whose revenue is expected to rise to $210 billion globally in 2014, from $164 billion in 2009, according to ABI Research in Oyster Bay, N.Y.
In a note, Harrigan said Cablevision stock declined 5.6 percent on June 9, "reportedly off CVC engaging in the Bresnan Communications auction process." He said the winning bidder would acquire 320,000 customers with "high advanced service penetrations" and about $160 million in 2009 Ebitda.
Harrigan said his research suggests that Cablevision's market-share losses to Verizon Communications' (VZ) competing FiOS bundle "are wildly overamped in CVC's stock price."
Harley-Davidson: UBS Securities equity analyst Robin Farley maintained a neutral rating on shares of Harley-Davidson (HOG), the largest U.S. motorcycle maker, on June 10. She lowered a price target on the shares to $28.80 from $32.
In a note, Farley said that she believes Harley-Davidson's U.S. retail sales at dealers declined around 15 percent year-over-year in May vs. an industry decline of around 11 percent. While the company's quarter-to-date sales decline of 7 percent is an improvement over the first quarter's year-over-year decline of 24 percent, "it also signifies that the worst may not be over" for Harley's dealer-level sales, Farley said.
Men's Wearhouse: Wedbush Securities equity analyst Betty Chen kept an outperform rating on shares of Men's Wearhouse (MW) on June 10.
That same day, shares of the retailer of men's suits and attire advanced as much as 14 percent in New York trading after first-quarter earnings topped analysts' projections.
In a note, Chen said the company's better-than-expected first-quarter earnings per share (EPS) of 26¢ and its guidance for second-quarter EPS of 75¢ to 78¢ should "reaffirm its ability to navigate through macro headwinds" and deliver second-quarter EPS above current Wall Street estimates, given the strength of its tuxedo-rental business. Chen noted that current tuxedo reservations have "already hit 99 percent" of the company's plan, with additional bookings building.
The analyst said she still believes Men's Wearhouse can return to normalized margins, given its ongoing success capturing new customers, market-share dominance in tuxedo rentals, and improved retail sales. She kept her second-quarter EPS estimate of 80¢ and raised her fiscal 2011 (ending January) EPS estimate to $1.40 from $1.28.
Shuffle Master: Roth Capital equity analyst Todd Ellers reiterated a buy rating on shares of Shuffle Master (SHFL) on June 10. He raised a price target on the shares to $12 from $11.50.
On June 10, shares of the maker of casino-chip sorters and card shufflers rose as much as 12 percent in New York trading after posting second-quarter sales and profit that exceeded analysts' estimates. Revenue of $50.8 million surpassed the average estimate of $49 million, while per-share profit of 15¢ compared with a 10¢ projection.
In a note, Ellers said Shuffle Master reported a "strong" second quarter. He noted that the better-than-forecast results came from larger-than-expected sales of the electronic gaming tables in Singapore and Australia, combined with better-than-expected gross margins. The analyst said the company's balance sheet also continues to improve, with its net debt declining to $75 million.
Ellers raised his EPS estimates for fiscal 2010 (ending October) to 46¢ from 42¢ and for fiscal 2011 to 55¢ from 53¢.