Stock Picks: Dow Chemical,, Research In Motion

Dow Chemical: Credit Suisse equity analyst John McNulty reiterated an outperform rating on shares of Dow Chemical (DOW) on Aug. 4. He lowered a price target on the shares to $33 from $39.

On Aug. 3, Dow, the largest U.S. chemical maker, posted second-quarter profit that trailed analysts' estimates after adverse weather curbed crop-chemical demand and plants in Texas and Argentina unexpectedly shut.

Net income was $651 million, or 50¢ a share, compared with a net loss of $344 million, or 47¢, a year earlier, the company said in a statement. Profit excluding some items was 54¢, less than the 57¢ average estimate of 11 analysts in a Bloomberg survey.

Sales rose 20 percent, to $13.6 billion, with gains in every operating segment.

Dow, based in Midland, Mich., lost $300 million in revenue because of the monthlong closure of its polyethylene plant in Argentina and disruption to operations at the Deer Park and Oyster Creek plants in Texas, said Chief Executive Andrew Liveris. Wet weather in the U.S. and cold conditions in Europe affected pesticide applications, while flooding in Canada left millions of acres unplanted, Dow said.

In a note, McNulty said Dow's second-quarter results were "disappointing." He lowered earnings per share (EPS) estimates for 2010 to $1.61, from $1.69; for 2011 to $2.52, from $2.64; and for 2012 to $3.77, from $3.89, to reflect the reported second-quarter results as well as higher corporate expenses, the absence of its Styron division, which was sold to an affiliate of Bain Capital Partners in March, and "a slightly less aggressive outlook" for the company's agricultural business.

McNulty said he believes his expectations for improving sales, declining raw materials prices, and the end of plant outages justify an outperform rating on the shares. Stifel Nicolaus equity analyst George Askew raised a rating on shares of (PCLN), to buy from hold on Aug. 4. He set a $335 price target on the shares.

On Aug. 3,, the second-biggest online travel agency, announced second-quarter earnings and a third-quarter forecast that topped analyst estimates.

Second-quarter net income rose 72 percent, to $115 million, or $2.26 a share, from $67 million, or $1.38, a year earlier, the Norwalk (Conn.) company said in a statement. Excluding some costs, profit was $3.09 a share.

Sales climbed 27 percent, to $767.4 million. Analysts had estimated second-quarter profit of $2.65 a share and revenue of $733.1 million.

Revenue will rise between 29 percent to 34 percent this quarter, said. Excluding some costs, earnings will be at least $4.78 a share, the company said. That compares with the $4.18 predicted on average by analysts surveyed by Bloomberg.

Hotel booking will boost business in the second half of the year—particularly outside the U.S., where the company is gaining market share, Chief Executive Jeffery Boyd said. also is benefiting from the May acquisition of car-service company TravelJigsaw, which added $43.9 million in gross travel bookings in the second quarter.

In a note, Askew said reported what he viewed as a "strong" second quarter that "soundly" beat his estimates.

Based on the company's second-quarter results and third-quarter guidance, a "solid" competitive position, improving travel industry fundamentals, "a long runway" of growth in emerging markets, and a "reasonable" valuation, Askew raised his EPS estimates for 2010 to $12.39, from $10.82, and for 2011 to $15.21, from $12.27.

Askew said he believes is "the class act of … online travel …,"

Research In Motion: Kaufman Bros. equity analyst Shaw Wu reiterated a buy rating and $85 price target on shares of Research In Motion (RIMM) on Aug. 4.

On Aug. 3, the company and AT&T (T) introduced a new BlackBerry from RIM that will expand AT&T's lineup of smartphones beyond Apple's device.

The new handset, known as the Torch, has a touch screen and full Qwerty keyboard similar to those on RIM's most popular BlackBerry models, the companies said. The phone has a new operating system and Web browser. It will start selling Aug. 12, exclusively on AT&T's network, at $199.99 with a two-year contract.

In a note, Wu said he views the announcement as "a material positive" for RIM as he believes it "closes the feature set gap" with the Android phone from Google (GOOG) and Motorola (MOT) and with Apple's iPhone.

Wu noted that "Apple has sizable advantages with its unparalleled ecosystem, including the App Store, iTunes, iPad, Mac, and the iPod. … But we don't really view this as a battle against Apple. It is more about BlackBerry vs. everyone else, including Android, Nokia, and Microsoft."

Wu said he believes BlackBerry "is positioned to become the No. 2 most relevant platform with its industry-leading installed base of 46 million subscribers and with enhanced developer tools."

"We continue to believe the company is well-positioned in the smartphone [market] with its vertical integration and superior push network technology," Wu said.

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