Stock Picks: Edison International, Electronic Arts, Live Nation
Edison International: Wunderlich Securities equity analyst James Dobson maintained a hold rating and $37 price target on shares of Edison International (EIX), owner of California's largest electric utility, on Nov. 1.
On Oct. 29, Edison reported third-quarter adjusted earnings per share (EPS) of $1.46, topping the average estimate of $1.15 of analysts surveyed by Bloomberg. The company said it foresees 2010 adjusted EPS in a range of $3.45 to $3.60, vs. an earlier forecast of $3.15 to $3.45.
In a note, Dobson said Edison's third-quarter EPS was above his estimate of $1.19, with better utility results and improved results from its nonregulated business driving the better-than-expected earnings. Dobson said Edison's utility earnings benefited from higher capitalized returns, while profits at the unregulated business were aided by higher average wholesale power prices during the third quarter in the Midwest.
The analyst lowered an EPS estimates for 2011 to $3.10, from $3.15, and maintained a forecast for 2012 at $3.00.
Electronic Arts: Kaufman Bros. equity analyst Todd Mitchell maintained a buy rating and $21 price target on shares of Electronic Arts (ERTS), the second-largest video-game publisher, on Nov. 1.
In a note, Mitchell said EA will report fiscal second-quarter results after the market close on Nov. 2. "We think EA had a pretty good quarter vs. the benchmarks it set for itself," he said. Mitchell forecasts second-quarter revenue of $825 million, 28 percent below the prior-year period, and a loss per share of 10¢, compared with EPS of 6¢ a year ago.
"We … would probably be a little less aggressive ahead of this week's earnings report, in anticipation of cautionary comments" from EA management on the third-quarter outlook, Mitchell said.
Live Nation: Morgan Joseph equity analyst David Kestenbaum reiterated a buy rating and $13 price target on shares of Live Nation (LYV), the company that combined the world's largest concert promoter and ticketing companies in a January 2010 merger.
In a note, Kestenbaum said Live Nation is scheduled to report third-quarter operating results after the market close on Nov. 4. He said he expects the company to post revenue of $1.919 billion, vs. $2.14 billion last year, and pro forma adjusted operating income of $213.4 million, vs. $222.2 million last year.
"We believe LYV was successful driving traffic to its shows through discounting of tickets," Kestenbaum said. Revenue per ticket should decrease from a year earlier, though ancillary revenue such as parking and beverages should benefit from the company's promotional pricing, he said.
"We believe the concert environment will likely strengthen in 2011 with a better roster of touring acts," Kestenbaum said.