Stock Picks: RightNow, Sirius XM, US Airways, Wal-Mart

Wall Street analysts offer buy, sell, or hold opinions on stocks in the news on July 7

RightNow Technologies: Janney Montgomery Scott equity analyst Sasa Zorovic lowered a rating on shares of RightNow Technologies (RNOW) to neutral, from buy, on July 7. He also lowered a fair value estimate on the shares to 17, from 22.

In a note, Zorovic said he was lowering second-half 2010 growth estimates for the Web-based customer-service provider because he expects the company to be affected adversely by a slowdown in information technology spending, competition from (CRM), unfavorable foreign exchange movements, and hiring costs incurred earlier in the year. "This makes the company more exposed to an 'air pocket' in revenue, lowering earnings," he wrote.

"Though RightNow has done a great job penetrating further its existing customer base, growing the number of large deals, increasing its [average selling prices], etc., its total customer count remains unchanged at 1,900," Zorovic said.

The analyst lowered second-quarter estimates for revenue to $43.2 million, from $43.8 million, and pro forma earnings per share (EPS) to 9¢, from 11¢. He reduced 2010 estimates for revenue to $180.2 million, from $181.9 million and EPS to 44¢, from 48¢.

Sirius XM Radio: Miller Tabak equity analyst David Joyce raised a rating on shares of Sirius XM Radio (SIRI) to buy, from neutral, on July 7. He kept a 1.25 one-year price target on the shares and instituted a long-term 1.45 target.

Sirius, the only U.S. satellite radio broadcaster, said on July 7 that it will have 1.1 million net new subscribers for the year, having added more than 583,000 in the second quarter. When it reported first-quarter results in May, Sirius said it would have more than 500,000 net additions for the year; two weeks later it raised that forecast to 750,000.

The company had a net subscriber decline of 185,999 in the second quarter of 2009.

In a note, Joyce said he was increasing his estimate for full-year net subscriber additions to 1.184 million, from 767,000. He said the stronger-than-anticipated subscriber growth was likely driven by continued strong auto sales. "[O]ther metrics indicate that the subscriber base is strengthening and that this is not necessarily just a short-term phenomenon," he said.

The analyst raised revenue forecasts for the second quarter to $696 million, from $691 million, and for 2010 to $2.80 billion, from $2.766 billion. Assuming gross addition costs of $74 per subscriber in the second quarter, up from $59 in the first, Joyce lowered his forecast for second-quarter operating cash flow to $119 million, from $159 million. He increased his operating cash flow estimates for the third quarter to $188 million, from $159 million, and for the fourth quarter to $140 million, from $131 million, which would result in an overall reduction to his full-year estimate to $584 million, from $606 million.

US Airways Group: Soleil Securities reiterated a buy rating on shares of US Airways Group (LCC) on July 7. The price target on shares of the airline was increased to 13, from 12.

On July 6, US Airways reported that June consolidated passenger revenue per available seat mile rose 22 percent.

In a brief note, equity analyst James Higgins said he believed that better-than-expected June revenue data was aided by the carrier's having a more leisure- and domestically focused passenger base than Continental Airlines, (CAL), which "disappointed" with its June revenue release.

Higgins raised EPS estimates for 2010 to $2.10, from $1.70, and for 2011 to $2.80, from $2.70.

The analyst called US Airways shares "an especially leveraged way to play an ongoing US airline recovery".

Wal-Mart Stores: UBS Securities equity analyst Neil Currie maintained a buy rating on shares of Wal-Mart Stores (WMT). He lowered a price target on shares of the world's largest retailer to 60, from 70.

"[W]e think Bill Simon, WMT's new US [chief executive officer], will bring change at the domestic business," Currie wrote in a note. He said the company's Project Impact, Win/Play/Show, and Clear Action Alley initiatives may be abandoned, and that "a return to a more traditional EDLP [everyday low pricing] model could and should (in our opinion) be in the cards." Curie said that spending on store remodelings may also be pared back and the company's strategy of expansion in urban markets "may become more of a focus."

"With high unemployment continuing to hit the traditional WMT customer and rapid changes to strategy we fear that, despite some heroic pricing on soda and snacks, [store] traffic and [same-store sales] remain under pressure (possibly still negative)," he said.

The analyst lowered EPS estimates for the second quarter to 93¢, from 98¢, for 2010 to $3.92, from $4.07, and for 2011 EPS to $4.30, from $4.40.

"While we have concerns about the cost of yet another change in strategy, we continue to like WMT for its cost strategy, international growth, and urban market potential," Currie said.

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