Stock Picks: Applied Materials, Cablevision Systems, Hewlett-Packard

Applied Materials: Credit Suisse equity analyst Satya Kumar reiterated a neutral rating on shares of Applied Materials (AMAT) on Sept. 13. He lowered a price target on the world's largest producer of chipmaking equipment to $12.25 from $13.50.

In a note, Kumar said he was lowering his estimate for semiconductor industry capital spending in calendar 2011 to $43.7 billion from $48.3 billion. In conjunction with his lowered views on capital spending, he cut his calendar 2011 estimates for revenue for Applied Materials to $9.01 billion from $10.25 billion and for earnings per share (EPS) to 95¢ from $1.07. He introduced estimates of $10.2 billion in revenue and $1.17 of EPS for calendar 2012.

"We would revisit our price target if AMAT can demonstrate faster than industry average growth through share gains or if the company is able to improve margins," Kumar wrote.

Cablevision Systems: Miller Tabak equity analyst David Joyce reiterated a buy rating on shares of Cablevision Systems (CVC), the fifth-largest U.S. cable operator, on Sept. 13, with a long-term price target of $35 and a short-term target of $31.

In a note, Joyce said he was "fine-tuning" 2011 estimates on Cablevision to reflect a greater amount of data and more voice customers than the firm had previously expected after completion of the company's pending acquisition of Bresnan Communications.

On June 14, Cablevision agreed to buy Bresnan from Providence Equity Partners for $1.37 billion to expand in the western U.S. The purchase lets Cablevision expand in Colorado, Montana, Wyoming, and Utah, which are attractive because they have lower pay-TV penetration rates than the company's home market and no competition from Verizon Communications's fiber-optic TV service.

In announcing the deal, Cablevision said the purchase will add to its free cash flow in 2011.

Joyce raised 2011 estimates for revenue to $8.216 billion from $8.003 billion, while his EPS view remained at $2.52,

Hewlett-Packard: Standard & Poor's equity analyst Thomas Smith reiterated a buy rating and $49 price target on shares of Hewlett-Packard (HPQ) on Sept. 13.

Hewlett-Packard, the world's biggest personal-computer maker, agreed to buy ArcSight on Sept. 13 for about $1.5 billion in cash to gain security software.

ArcSight investors will receive $43.50 a share, HP said in a statement. That's 24 percent more than the stock's Sept. 10 closing price. HP is headquartered in Palo Alto, Calif.

The deal follows purchases by HP in such areas as services, networking equipment, and smartphones, lessening its dependence on lower-margin computers and servers. ArcSight, a maker of software used to identify suspicious activity on a corporate network, may help HP incorporate security features better into other products.

"We believe … ArcSight's security and compliance management software would enhance HPQ's enterprise computing offerings, if the deal is completed as planned by yearend," Smith said in a posting on the S&P MarketScope service. Smith noted that "security is a key issue in cloud computing," and he expects server makers to focus on adding expertise in security.

Smith maintained an operating EPS estimate of $4.51 for fiscal 2010 (ending October).

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