Stock Picks: GE, Halliburton, Juniper
General Electric Co.: Credit Suisse equity analyst Julian Mitchell reiterated an outperform rating on shares of General Electric Co. (GE) on July 19. He lowered a price target on the shares to $22 from $23.
On July 16, GE shares fell the most since May in New York trading as second-quarter sales trailed analysts' estimates on fewer shipments of products such as turbines and railroad locomotives.
Revenue slid 4.3 percent to $37.4 billion, lagging behind the $38.3 billion average estimate of nine analysts surveyed by Bloomberg. Profit from continuing operations rose 14 percent to $3.3 billion, or 30 cents a share, GE said. That beat the 27-cent average of 12 estimates.
Sales decreased in the technology, energy, and finance units at GE, the world's biggest maker of jet engines, power-plant turbines, and medical-imaging equipment. The profit gain snapped seven declines in per-share earnings as Chief Executive Officer Jeffrey Immelt stemmed loan losses and boosted reserves over the past two years at GE Capital.
In a note, Mitchell said he was lowering earnings-per-share (EPS) estimates for 2010 to $1.11 from $1.12, for 2011 to $1.37 from $1.45, and for 2012 to $1.68 from $1.74 due to higher research and development costs at the company's aviation unit and "an ongoing subdued" demand outlook for its energy business.
"[W]e are encouraged by evidence the management of industrial incremental margins is improving, and the resumption of order growth," Mitchell said. "The risk/reward we believe is attractive … particularly as GE … will likely see accelerating EPS growth next year, against potentially slower EPS growth for many other industrial companies."
Halliburton Co.: Standard & Poor's equity analyst Stewart Glickman maintained a hold rating and $35 price target on shares of Halliburton Co. (HAL), the biggest provider of land-based oilfield services in the U.S., on July 19.
On July 19, Halliburton said second-quarter profit rose as gains in onshore drilling made up for a halt to new wells in the Gulf of Mexico.
Net income increased to $480 million, or 53 cents a share, from $262 million, or 29 cents, a year earlier, Houston-based Halliburton said in a Business Wire statement.
In a posting on the S&P MarketScope service, Glickman said Halliburton's second-quarter EPS was 21 cents above his estimate, with results led by a strong recovery in North America, despite the onset of the deepwater drilling ban in the U.S. Gulf of Mexico, reflecting, in his view, strong growth in U.S. land-based drilling.
The analyst said Halliburton had noted that pricing for its offerings is on the rise. He expects the company to rein in price increases in order to protect market share "and prevent a stronger industry capacity response."
Glickman raised EPS forecasts for 2010 to $1.68 from $1.41, and for 2011 to $2.31 from $2.09.
Juniper Networks Inc.: Rodman & Renshaw equity analyst Ashok Kumar maintained a market perform rating on shares of Juniper Networks Inc. (JNPR), the second-biggest U.S. maker of networking equipment, on July 19.
In a note, Kumar said he expects Juniper to report second-quarter revenues on July 20 that are in line with or slightly above Wall Street estimates of $954 million.
Kumar said he believes that Cisco Systems (CSC) and Alcatel-Lucent (ALU) are positioned to capture incremental spending at AT&T (T) for IP aggregation networks. He said Juniper faces "looming share loss" to Cisco for routers sold to Comcast Corp. (CMCSA), though sales to Verizon (VZ) for network capacity expansion and upgrades could be "a partial offset."
"We expect near-term demand trends to have stabilized … [b]ut Juniper faces structural erosion in competitive positioning in both cable- and telco- service provider segments," the analyst said.