Stocks Picks: Hasbro, Intel, Motorola, Yum! Brands

Wall Street analysts offer buy, sell, or hold opinions on stocks in the news on July 14

Hasbro: Morgan Joseph equity analyst Jeffrey Blaeser reiterated a buy rating and $46 price target on shares of Hasbro (HAS), the world's second-biggest toymaker, on July 14.

In a note, Blaeser said Hasbro is scheduled to report second-quarter results prior to the start of trading July 19. He expects second-quarter earnings per share (EPS) to be 20¢, vs. 26¢ a year earlier, with year-over-year sales declining around 5 percent, to $750 million.

"While near-term results may be challenged, we continue to believe investors are more focused upon 2011 and beyond," the analyst wrote, citing upcoming films for which Hasbro has licenses. He noted that 2011 should feature releases of Transformers 3, Captain America: The First Avenger, and Thor, followed by a 2012 schedule that includes Battleship, Spider-Man 4, and Stretch Armstrong.

"While Hasbro confirmed that it was approached by a private equity firm to take the company private, Hasbro stated that it had no interest in pursuing such a transaction," the analyst wrote.

Providence Equity Partners was in discussions with Hasbro as recently as last week before the talks ended, according to a person familiar with the matter, Bloomberg News reported on June 24.

"[E]ven the suggestion and subsequent consideration of such a deal may provide additional downside support to the current share price," Blaeser.

Intel: Jefferies equity analyst Adam Benjamin maintained an underperform rating on shares of Intel (INTC) on July 14.

After the close of trading July 13, Intel, the world's biggest chipmaker, reported record second-quarter sales and topped analysts' estimates with its forecast for this period, allaying concern that a rebound in technology spending is losing steam.

Second-quarter net income was $2.89 billion, or 51¢ a share, compared with a loss of $398 million, or 7¢, a year earlier, when Intel paid a European Union fine the Santa Clara (Calif.) company said in a statement. Analysts estimated a profit of 43¢ a share. Revenue increased 34 percent, to $10.8 billion, last quarter, compared with an average estimate of $10.3 billion.

Reporting its third straight quarter of sales growth after last year's contraction, Intel said corporate spending is strengthening, signaling that the economy isn't headed back into recession.

Third-quarter sales will be $11.6 billion, plus or minus $400 million, Intel said. Analysts had estimated $10.9 billion, on average, according to a Bloomberg survey.

In a note, Benjamin said Intel reported better second-quarter results and guided third-quarter revenue "materially above" the Wall Street consensus on continued strength in its enterprise business and seasonally higher consumer orders. The analyst raised his 2010 EPS estimate to $2.10, from $1.85, and his 2011 EPS forecast to $2.33, from $1.94.

Benjamin noted that with the PC supply chain "now fully recovered," he believes Intel will be challenged by slowing growth in desktop PC sales and pressures on average selling prices from a shift in laptop sales toward lower-priced, lower-margin models. Moreover, he said, the stock price already reflects investor expectations for an enterprise upgrade cycle.

Motorola: Standard & Poor's equity analyst James Moorman maintained a buy rating and $9 price target on shares of Motorola (MOT) on July 14.

On July 14, The Wall Street Journal reported that Nokia Siemens Networks is in negotiations to purchase Motorola's telecommunications-equipment business, citing unidentified people familiar with the situation.

The deal, which may come in the next few weeks, may be worth $1.1 billion to $1.3 billion, the newspaper said. The business, which mostly makes older equipment, would give Nokia Siemens access to Motorola's customers in the U.S., such as Verizon Wireless and Sprint Nextel, according to the report.

"In our opinion, a sale of the telecom-equipment division would be in line with plans to split the company into two publicly traded companies" in the first quarter of 2011, Moorman wrote in a posting on the S&P MarketScope service. Moorman estimates revenue of approximately $3.7 billion for the telecom-equipment unit in 2010.

"We would like to see a slightly higher price if the division is sold," Moorman said.

Yum! Brands: Sanford C. Bernstein equity analyst Sara Senatore kept a market perform rating on shares of Yum! Brands (YUM) on July 14, with a $42 price target.

After the close of trading July 13, the owner of Taco Bell and other restaurant chains reported a second-quarter adjusted profit of 58¢ a share. The average estimate of analysts surveyed by Bloomberg was a profit of 54¢ a share.

The company said it expects to earn $2.43 a share this year, excluding some items. That's short of the average analyst estimate of $2.48 in a Bloomberg survey.

In a note, Senatore said the company's second-quarter EPS was in line with her estimate. She noted that while Yum! Brands raised its $2.39 2010 EPS forecast to $2.43, her estimate was $2.44.

Senatore said that Yum! Brands has outperformed its peers as macroeconomic news out of China has been healthier than data from developed markets. At the stock's current price, she does not expect the better-than-expected second-quarter results to support "material further upside" in the shares.

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