Stock Picks: FedEx, First Solar, Netflix
FedEx: Standard & Poor's equity analyst Jim Corridore reiterated a strong buy rating and $113 price target on shares of FedEx (FDX) on Sept. 16.
FedEx, the second-largest U.S. package-shipping company, forecast earnings for the current quarter on Sept. 16 that fell short of analysts' estimates and said it will eliminate 1,700 jobs.
Net income for the three months ending in November will be $1.15 to $1.35 a share, the Memphis company said in a statement. Analysts projected $1.37 a share, the average of 19 forecasts compiled by Bloomberg. Full-year adjusted earnings per share will be in a range of $4.80 to $5.25, FedEx said. Analysts estimated $5.21.
Net income for the three months ended Aug. 31 was $380 million, or $1.20 a share, which fell short of the average $1.21 estimate of 19 analyst projections in a Bloomberg survey. Net income more than doubled from the year-earlier $181 million, or 58¢ a share. Revenue rose 18 percent, to $9.46 billion.
The company said it will eliminate jobs and close about 100 facilities as it combines freight and less-than-truckload operations starting in January. Most of the closings are transfer stations and warehouse space FedEx acquired when it bought Watkins Motor Lines in 2006.
In a posting on the S&P MarketScope service, Corridore said FedEx's fiscal first-quarter results were in line with his estimate. He noted its plans to restructure its freight business, which was unprofitable in the first quarter.
Corridore kept his earnings per share (EPS) estimates for fiscal 2011 (ending May) at $5.35 and for fiscal 2012 at $6.86. His estimates assume "a slow economic recovery but no double dip."
"We think FDX will see operating leverage" if the economy accelerates, the analyst said.
First Solar: Kaufman Bros. equity analyst Jeffrey Bencik maintained a buy rating and $162 price target on shares of First Solar (FSLR) on Sept. 16.
In a note, Bencik said demand for the company's $1 billion Agua Caliente solar electricity generation project in Yuma County, Ariz., is "strong." He said the company is in negotiations with more than five bidders for output from the the 290 megawatt project.
Bencik said Agua Caliente will be the largest solar plant in the world when completed, with revenue most likely to be recognized in the first quarter of 2011.
"Importantly, FSLR continues to develop new regions, and India and China could both become meaningful in 2011," the analyst said.
Netflix: Credit Suisse equity analyst John Blackledge raised a rating on shares of NetFlix (NFLX) to neutral from outperform on Sept. 16. He raised a price target on the shares to $140 from $90.
In a note, Blackledge said the rating change on the movie rental service provider was based on a Credit Suisse survey and a new analysis of the company's costs. He said the research suggests a "greater opportunity" in NetFlix shares as the company shifts from DVD by mail to streaming. Blackledge said the survey suggests that the company's streaming service is "compelling" and should become more attractive as it acquires additional streaming content. "In turn, this is creating a virtuous cycle whereby NFLX's [subscriber] base grows, leading to greater financial resources to acquire more content to improve the user experience and continue to grow the sub footprint," he said.
Blackledge said the firm's analysis suggests DVD costs may fall more quickly than expected, "insulating margins as NFLX continues to acquire expensive streaming content."
The analyst raised EPS estimates for 2010 to $2.87, from $2.82, and for 2011 to $3.87, from $3.69.