Stock Picks: DirecTV, Nokia, Omnicom
DirecTV: Wunderlich Securities equity analyst Matthew Harrigan reiterated a buy rating and $46 price target on shares of DirecTV (DTV) on Sept. 10.
In a note, Harrigan said he remained positive on shares of the largest U.S. satellite-TV provider, citing the stock's "defensive character" amid stock repurchases by management and the company's affluent customer base. He also mentioned the growth potential of its Latin American business, its "branding and engineering versatility" with new efforts in advertising stored on the company's digital video recorders, DirecTV Cinema movie rentals via DVRs and broadband, and its NFL Sunday Ticket package of football games, among other things.
Harrigan said he expects DirecTV to retire nearly 30 percent of its current shares through 2012. "Any near-term dislocation off an event such as a possible March 2011 NFL lockout could enhance share repurchase efficiencies," he said.
Nokia: Standard & Poor's equity analyst Jason Willey maintained a strong buy rating on the American depositary shares of Nokia (NOK) on Sept. 10.
Nokia on Sept. 10 named Stephen Elop, head of Microsoft's business unit, as chief executive after the world's largest mobile-phone maker's struggles to take on Apple's iPhone wiped $61 billion off its market value.
Elop, a 46-year-old Canadian, will take over as president and CEO starting Sept. 21, replacing Olli-Pekka Kallasvuo and becoming the first non-Finn to head the company. Kallasvuo will remain in a nonexecutive capacity on the board of Nokia Siemens Networks, the Espoo, Finland-based company said in a statement. Nokia shares rose as much as 6.9 percent.
Elop, who was responsible for the Office suite of products at Microsoft, will need to persuade investors that Nokia can deliver devices to take on Apple's iPhone and handsets based on Google's Android software. Three years after Apple introduced the iPhone, changing the mobile-phone industry with thousands of applications, Nokia has been struggling to develop a smartphone with the same mass appeal. It has been forced to cut prices, sacrificing profits to defend its market share.
"We are encouraged by the diverse nature of Elop's background and believe fresh leadership is necessary as NOK tries to adapt to shifts in the handset industry towards software and innovation," Willey wrote in a posting on the S&P MarketScope service. He noted that the announcement came ahead of next week's Nokia World conference, where he expects the company to show its new N8 smartphone, based on its Symbian3 operating system, as well as officially announce several other Symbian3 products.
"We see NOK as undervalued based on our peer-based analysis," Willey wrote.
Omnicom Group: Credit Suisse equity analyst Peter Stabler raised a rating on shares of Omnicom Group (OMC), the biggest U.S. provider of advertising and marketing services, to outperform from neutral on Sept. 10. He also increased a price target on the shares to $43 from $40.
In a note, Stabler said that while Omnicom "adroitly" managed the economic downturn, the shares have "substantially" underperformed both the S&P 500 index and the company's peer group.
Stabler said he disagrees with investors who have "come to believe OMC's once-dominant growth leadership position has been permanently compromised" and are concerned whether it has kept pace with European peers in "evolving its assets to address the shift to digital marketing."
"We … believe that OMC is not a digital laggard, remains fully competitive, and still holds the best collection of assets among the [advertising and marketing] group," he said.
The analyst lowered an earnings per share (EPS) estimate for 2010 to $2.74 from $2.76. He raised EPS estimates for 2011 to $3.14 from $3.11 and for 2012 to $3.59 from $3.54.
Stable said that while he expects the company to step up the pace of smaller acquisitions, "we also believe company will accelerate a return of capital to shareholders through share repurchases."