Stock Picks: CF Industries, Oracle, Research In Motion

Wall Street analysts offer buy, sell, or hold opinions on stocks in the news on Sept. 17

CF Industries Holdings Inc.: Soleil Securities initiated coverage of shares of CF Industries Holdings Inc. (CF) with a hold rating and $105 price target on Sept. 17.

In a note, equity analyst Mark Gulley said the company's April 2010 acquisition of Terra Industries formed "a co-number one in the global nitrogen fertilizer business."

Gulley said corn production requires nitrogen fertilization and growers' ability to afford nitrogen increases with higher grain prices.

The analyst said that after a 54 percent move in the stock since June 30, driven by the recent sharp rally in grain prices, the shares were selling at 11.8 times his 2011 earnings-per-share (EPS) estimate of $8.10.

Oracle Corp.: Janney Montgomery Scott equity analyst Robert Simmons reiterated a buy rating on shares of Oracle Corp. (ORCL) on Sept. 17. He raised a fair value estimate on the shares to $34 from $30.

Shares of Oracle, the second-largest software maker, rose in late trading Sept.16 after its first-quarter results and sales forecast topped analysts' estimates, helped by an expansion into computer hardware.

Excluding acquisition costs and other expenses, earnings climbed to 42 cents a share last quarter, beating the 37-cent average of projections compiled by Bloomberg. Oracle indicated that sales will be at least $8.4 billion in the current period. Analysts had estimated $8.21 billion.

The company is counting on hardware to spur a new wave of growth, underpinned by its acquisition of Sun Microsystems Inc. this year. Oracle is assembling more prepackaged systems, which combine its software with Sun's servers. By adding salespeople and engineers and moving away from low-end machines, Oracle aims to squeeze more sales and profit from hardware, which generated $1.7 billion last quarter.

Oracle rose 4.7 percent to $26.55 in extended trading Sept. 16. The shares, up 3.4 percent this year, had closed at $25.36 on the Nasdaq Stock Market.

"The company delivered [a] very strong [fiscal first quarter] across the board, surpassing our—and Street—expectations," Simmons said. He said its hardware margins and database business were "particularly strong."

Oracle "executed well across product lines and geographies," the analyst said. "We expect such execution to continue."

Simmons raised fiscal second-quarter estimates for revenue to $8.424 billion from $8.066 billion, and for EPS to 48 cents from 44 cents.

For fiscal 2011 (ending May), the analyst increased estimates for revenues to $34.791 billion from $33.885 billion, and for EPS to $2.01 from $1.91.

Research In Motion Ltd.: Wunderlich Securities analyst Matthew Robison maintained a buy rating and $67 price target on shares of Research In Motion Ltd. (RIMM) on Sept. 17

Shares of RIM, maker of the BlackBerry smartphone, surged in late trading Sept.16 after the company forecast revenue and profit that were higher than analysts' estimates, buoyed by expectations for its new Torch phone.

The Torch "is an excellent step forward," co-Chief Executive Officer Jim Balsillie told analysts Sept. 16 on a conference call. "The promo campaigns are just starting. That's why you have seen the jump in guidance."

Revenue this quarter will be as much as $5.55 billion and earnings per share will be as much as $1.70, RIM said in a statement. Analysts had projected revenue of $4.82 billion and profit of $1.39 a share.

RIM, based in Waterloo, Ont., rose as much as $4.32, or 9.3 percent, to $50.81 in extended trading after the announcement on Sept. 16, after closing at $46.49 on the Nasdaq Stock Market. The stock has lost 31 percent this year.

Sales last quarter rose 31 percent to $4.62 billion, RIM said. Analysts had predicted $4.49 billion, the average of estimates compiled by Bloomberg. Earnings per share were $1.46 compared with an average estimate, excluding some costs, of $1.36.

Net income climbed to $796.7 million from $475.6 million, or 83 cents a share, a year earlier. Gross margin, the percentage of sales left after production costs, is expected to be about 42 percent this quarter, down from 44.5 percent last quarter, the company said. The average selling price will climb from $304 last quarter to a range of $310 to $315 this quarter, the company said.

In a note, Robison said RIM's second-quarter results and outlook "makes the Model T of smartphones look more like a hot rod," with revenue 5 percent above his forecast and operating profit that was 7.9 percent above his expectation. He noted that new subscriber activations grew by nearly 5 percent from the preceding quarter to 11 million.

"We expect a steady flow of new product announcements for the remainder of the calendar year," Robison said, with the next news likely to be associated with the BlackBerry developers' conference at the end of September.

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