Google (GOOG)

Stifel Nicolaus reiterates buy; raises price target

In a note to investors Sept. 24, Stifel Nicolaus & Co. analyst George Askew hiked his price target for the company’s stock to $590 from $475 and reiterated a buy rating.

The move comes just two days after Canaccord Adams boosted its price target to $560 from $480, predicting a recovery in advertising budgets toward the end of the year.

Askew said the improving economy will help Google in two ways: First by lifting ad budgets. Most of Google’s revenue comes from search ads. Second, a better economy could also mean the number of people clicking on those ads will rise, “driven by a re-energized consumer,” he said.

Askew added that Google’s profit margin should improve after “management’s judicious cost cuts” in the past few months. To preserve earnings as revenue growth slows, Google has cut capital spending and trimmed its payroll by more than 300 positions.

Askew also pointed to recent technology improvements Google has made to boost ad revenue. For instance, the company just introduced an ad exchange for display advertisements, making a play for rival Yahoo Inc.’s traditional stronghold.

Goldman Sachs Group (GS)

Morgan Stanley (MS)

Bernstein Research maintains outperform on both; raises price target on Goldman

Bernstein Research analyst Brad Hintz on Sept. 24 raised his price target for Goldman Sachs Group Inc. and said both Goldman and Morgan Stanley are poised for long-term growth amid a recovery in investment banking and brokerage businesses.

Hintz raised his price target on Goldman to $220 from $190. Hintz maintained a $37 price target for Morgan Stanley.

In a research note, Hintz said economic recovery in 2010 and 2011 should help drive improvements in high margin business such as mergers and acquisitions, equity underwriting and brokerage operations.

Goldman will be able to take advantage of the improvement as one of the largest mergers and acquisitions advisers, Hintz said.

Morgan Stanley should get a boost from a return of retail investors to the market now that it is a majority owner of the largest retail brokerage business in the country, Hintz added.

Morgan Stanley completed a deal earlier this year to merge its wealth management unit with Citigroup Inc.’s Smith Barney brokerage business. Morgan Stanley received a majority stake in the joint venture, and will eventually have the option to acquire the remaining portion it does not already own.

The analyst predicts Goldman will earn $16.07 per share in 2009 and $17.24 per share in 2010. Hintz expects Morgan Stanley will lose 52 cents per share for 2009 and earn $3.58 per share in 2010.

Bed Bath & Beyond (BBBY)

Credit Suisse downgrades to neutral from outperform; raises price target

Credit Suisse analyst Gary Balter said in a Sept. 24 client note that his downgrade was not related to the company’s management or its quarterly earnings results.

After the close of trading Sept. 23, Bed Bath & Beyond reported a second-quarter profit of 52 cents per share, which topped the 48-cents-per share forecast of analysts polled by Thomson Reuters. Analysts’ estimates normally exclude one-time items.

Balter said the chain has performed well and expects it to continue to deliver a strong performance in the future, but he can’t justify the current stock price. Bed Bath & Beyond’s stock hit a fresh 52-week high of $40.23 on Wednesday — up 52% since the beginning of the year.

While Balter cut Union, N.J.-based Bed Bath & Beyond’s rating, he increased its price target to $41 from $35.

Investors may also be a bit concerned about the company’s assessment of Wall Street’s full-year earnings estimate, as executives said in a conference call that the 2009 forecast of $1.79 per share looked reasonable. Bed Bath & Beyond does not provide its own specific guidance.