Stock Picks: Bank of America, Dell, JDS Uniphase

Bank of America: Credit Suisse equity analyst Moshe Orenbuch reiterated an outperform rating and a $20 price target on shares of Bank of America (BAC) on Aug. 26.

In a note, Orenbuch said he was meeting with members of senior management of the largest U.S. lender on Aug. 27 and expected them to reiterate the company's focus on streamlining its businesses and balance sheet and tightening risk management practices. "We believe that there are substantial opportunities to improve capital and book value through optimizing the balance sheet," he said.

"While revenue headwinds remain, expense control and lessening credit costs will dictate the earnings dynamic over the near-term," Orenbuch said.

The analyst said Bank of America is still the cheapest of the large-cap banks he follows, trading at about 6 times estimated 2012 earnings vs. the peer average for large-cap banks of 7 times.

Dell: Standard & Poor's equity analyst Thomas Smith reiterated a hold rating on shares of Dell (DELL) on Aug. 26.

Dell raised its bid for 3Par> on Aug. 26 to $1.6 billion, topping Hewlett-Packard's (HPQ) offer in the bidding war for the storage maker.

Dell is offering $24.30 a share, and 3Par has accepted the increased bid, Dell said in a statement. HP offered $24 a share this week, topping Dell's original offer of $18 a share.

Winning the deal for 3Par, which helps companies store data more efficiently, would give Dell a leg up in competing with larger rivals Cisco Systems (CSCO) and International Business Machines (IBM). The bid values 3Par at eight times revenue and is more than double 3Par's share price before any bids were announced.

"We think that the bidding in this colorful contest may not be over," Smith said in a posting on the S&P MarketScope service.

The analyst said he believes Dell faces a dilemma of "either paying a lot for a favored building block for its data center expansion strategy or having to grow via second-best strategies." The situation is likely to put near-term pressure on the shares, Smith said.

JDS Uniphase: Soleil Securities maintained a hold rating and $12 price target on shares of JDS Uniphase (JDSU) on Aug. 26.

On Aug. 25, the maker of fiber-optic equipment reported fourth-quarter revenue of $390.9 million, missing the average analyst estimate in a Bloomberg survey of $400.2 million. Adjusted earnings per share (EPS) for the quarter were 15¢, vs. the average estimate of 14¢.

JDS Uniphase said it expects revenue for the first quarter of fiscal 2011 (ending June) of $410 million to $425 million, vs. the average analyst estimate of $418 million.

In a note, equity analyst Michael Genovese said fourth-quarter revenue missed his $407 million forecast; EPS also missed his estimate. He said fiscal 2010 first-quarter revenue guidance was stronger than he expected.

"Trends across most of the company appear solid," Genovese said.

The analyst raised an EPS forecast for calendar 2010 to 76¢ from 68¢.

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