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Adobe Systems Inc.: Deutsche Bank equity analyst Tom Enrst Jr. maintained a buy rating on shares of Adobe Systems Inc. (ADBE) on Mar. 17.

In a note, Ernst said he expects the maker of the Flash video software to post “solid” first-quarter results on Mar. 23, ahead of the Wall Street consensus expectations of revenues of around $827 million and earnings per share (EPS) of 37 cents. Ernst said the improving macroeconomic environment, alongside a strong fourth-quarter deferral, more than offset depressed demand ahead of the product cycle for Creative Suite 5 — the newest iteration of the company’s flagship bundled offering — which he expects to launch in the second or third quarter of 2010. Ernst estimates first-quarter revenues of $835 million and EPS of 39 cents.

While uncertainty around the company’s October 2009 acquisition of Web analytics company Omniture has muted investor sentiment regarding Creative Suite 5, Ernst said he believes the launch of the product should help return Adobe shares “to more typical premium levels”.

The analyst hiked a price target on the shares to $46 from $44.

BlackRock Inc.: Credit Suisse equity analyst Craig Siegenthaler raised an investment rating on shares of BlackRock Inc. (BLK) to outperform from neutral on Mar. 17.

In a note, Siegenthaler said recent underperformance in BlackRock shares, and their improved valuation relative to peers, “provides an entry point” on the stock. He said he believes BlackRock is “best-positioned” to benefit from three factors that could drive growth in assets under management: ETF products, the payout market (retirees in the U.S. and Western Europe); and international distribution.

“More importantly, we expect strong EPS and [fund] flows to drive stock price outperformance over the intermediate term, Siegenthaler wrote.

The analyst raised a 2011 EPS estimate to $13.50 from $13.30, vs. the $13.22 consensus estimate of Wall Street analysts. He also lifted a price target on the shares to $280 from $270.

Discover Financial Services: William Blair & Co. equity analyst David Long maintained an outperform rating on shares of Discover Financial Services (DFS) on Mar. 17.

The credit-card lender announced on Mar. 16 a net loss for the three months ended Feb. 28 of $103.5 million, or 22 cents a share, compared with a profit of $120.4 million, or 25 cents, in the same period a year earlier. The card issuer said March 11 that it expected to report a loss of 22 cents to 23 cents a share. It also said it will pay back $1.2 billion to the Troubled Asset Relief Program, making the lender the last of the six biggest U.S. credit-card issuers to return bailout money.

Discover received regulatory approval to redeem the $1.2 billion of preferred stock that it issued to the U.S. Treasury Department under the TARP Capital Purchase Program, the company said. Discover Bank will issue $350 million of subordinated debt during the second quarter, the company said.

In a note, Long said the loss in the most recent quarter included a $305 million (34 cents per share) addition to Discover’s loan loss reserve to incorporate a new analytical process intended to enhance management’s ability to estimate incurred losses on non-delinquent accounts. The analyst said Discover indicated that net charge-offs of bad debt may have peaked in its fiscal first quarter as it recorded charge-offs of 8.51% of average loans and guided second-quarter charge-offs to be in the 8.0% to 8.5% range; additionally, delinquencies of 5.05% declined from 5.31% in its fiscal fourth quarter.

“When we consider that delinquencies seasonally increase in the first quarter from the fourth quarter, the contraction leads us to believe that Discover’s credit quality may be improving at a faster pace than we previously expected and that it will be able to begin materially releasing loan loss reserves by the third quarter,” Long wrote.

In the wake of Discover’s TARP repayment announcement, the analyst said he calculates that the company will remain “well capitalized”; its tangible common equity ratio at Feb. 28 was 8.1%.

Long reduced a fiscal 2010 (ending November) EPS estimate by 22 cents to 58 cents to incorporate the addition to reserves. He noted that “increasing the loan loss reserve in the first quarter increases the reserve release in future quarters as credit quality improves”; he raised his fiscal 2011 EPS estimate by 10 cents to $1.65.

“We expect the consensus 2011 EPS estimate to increase, driving attractive stock price appreciation, as we expect the company to continue to report improving consumer credit quality trends over the next several quarters,” Long wrote.

Greenhill & Co. Inc.: Keefe, Bruyette & Woods equity analyst Lauren Smith raised an investmnet rating on shares of Greenhill & Co. Inc. (GHL) to outperform from market perform on Mar. 17.

Greenhill, the merger advisor founded by Robert Greenhill, said on Mar. 16 it will buy Australia’s Caliburn Partnership Pty for as much as $181 million, adding a firm whose clients include Rio Tinto Group and Westpac Banking Corp. New York-based Greenhill agreed to buy the 11-year-old financial adviser with 1.1 million shares valued at $90.7 million. If Caliburn meets certain revenue targets in three and five years, Greenhill will pay out more stock worth $90.7 million, based on the latest closing price.

In a note, Smith said Greenhill’s announcement that it was acquiring Caliburn was a “game changer” for the company. Smith said that with Greenhill’s expanded geographic presence, she believes the deal will add to the company’s earnings “immediately”.

She raised her 2010 EPS estimate to $3.45 from $3.15 and her 2011 projection to $5.40 from $4.25.

The analyst also hiked her price target on the shares to $110 from $82.

Netflix Inc.: Morgan Stanley analyst Scott Devitt lowered a recommendation on shares of Netflix Inc. (NFLX) to equal-weight from overweight on Mar. 12.

In a note, Devitt said the rating change on the largest U.S. mail-order movie-rental service was based on the stock’s valuation. “We remain positive on Netflix’s core DVD-by-mail and digital offering, but the recent rally in [the] share price, expectation of future earnings beats, longer-term potential hike in postal rates, [and] competition from Redbox and emerging digital players lead us to look elsewhere for investment ideas,” the analyst wrote.

Devitt noted that Netflix’s shares were 59% since mid-August, vs. gains of 19% for the Nasdaq composite index and 15% for the S&P 500 index.

“We think Netflix shares are fairly valued and that short interest of [nearly] 19% could provide near-term support if the company continues to beat [or] meet expectations as we expect,” Devitt wrote. “We believe Netflix’s hybrid distribution model (physical DVD-by-mail and digital streaming) positions the company favorably to capture meaningful share of the video/TV rental market.”

The analyst has a price target of $68 on the shares.

Nike Inc.: Susquehanna Financial Group analyst Christopher Svezia reiterated a neutral rating on shares of Nike Inc. (NKE) on Mar. 12.

“We believe global sales trends continue to show sequential improvement and leaner inventories should lead to better margins” for the world’s largest athletic-shoe maker, the analyst wrote in a note. “[W]e expect a more moderately paced margin recovery as investments accelerate and believe the current valuation is balanced against this backdrop”.

Svezia noted that Nike reports third-quarter earnings after the close of trading Mar. 17. He said his third-quarter EPS estimate of 90 cents is 2 cents above the Wall Street consensus view. He raised his fourth-quarter EPS estimate to $1.00 from 95 cents in anticipation of continued gross margin gains from “clean” inventory and fewer markdowns. He hiked his EPS estimates for fiscal 2010 (ending May) to $3.71 from $3.64 and for fiscal 2011 to $4.08 from $3.92.

“We believe a moderate near-term growth outlook and the recent share price run leaves valuations balanced with little room for near-term upside as shares approach all-time highs,” Svezia wrote.

Discover Financial Services: FBR Capital Markets analyst Scott Valentin reiterated an outperform rating on shares of Discover Financial Services (DFS) on Mar. 12.

The credit-card lender forecast a first-quarter loss of 22 cents to 23 cents a share on Mar. 11, after saying the company will record a pretax increase in loan loss reserves of $305 million.

“We … urge investors to buy on any weakness related to its [first-quarter] EPS loss preannouncement,” Valentin said in a note. The analyst reduced his fiscal 2010 (ending November) EPS estimate to 34 cents from 62 cents to reflect a $305 million pretax charge (34 cents per share) to build reserves equal to projected 12-month net charge-offs for bad debt, and increased his fiscal 2011 EPS estimate to $1.66 from $1.50 to reflect increased reserve releases.

Valentin said that excluding the impact of the reserve build, first-quarter EPS results of 11 cents to 12 cents were 3 cents ahead of his estimate, mostly driven by lower credit losses (8.5%, vs. his 8.7% estimate). “In addition, credit appears to be performing better than we projected”, the analyst wrote, with net charge-offs lower than his expectation.

The analyst also reiterated his $19 price target on the shares.

National Semiconductor Corp.: Bank of America Merrill Lynch analyst Sumit Dhanda reiterated an underperform rating on shares of National Semiconductor Corp. (NSM) on Mar. 12.

Dhanda said in a note that the maker of chips that control power in electronic devices posted third quarter sales of $362 million on Mar. 11, beating earlier management guidance of $345 million, his own estimate of $352 million, and the Wall Street consensus view of $349 million. The analyst said the better than expected revenues were driven by strength in the company’s industrial segment, which accounts for 45% of sales. Dhanda said pro forma EPS of 30 cents was ahead of his estimate of 25 cents and the Street consensus forecast of 24 cents.

Dhanda raised a fiscal 2011 EPS estimate to $1.03 from 68 cents.

“With industrial (45% of sales) having posted three quarters of double digit growth (+14% Q/Q in Q3, +17% in Q2 and +15% in Q1), we question the sustainability of industrial to serve as a major growth driver for NSM in fiscal 2011, given that industrial sales have likely normalized to or even exceeded the true consumption trend line,” the analyst wrote. “In the absence of sustainable long term sales growth … earnings growth will ultimately remain elusive, in turn putting a ceiling on share price appreciation,” he said.

Dhanda has a price objective of $12 on the shares.

Walt Disney Co.: Deutsche Bank analyst Doug Mitchelson reiterated a buy rating on shares of Walt Disney Co. (DIS) on Mar. 7.

The studio’s “Alice in Wonderland,” the Lewis Carroll tale re-imagined in 3-D by director Tim Burton, made $116.3 million in U.S. and Canadian ticket sales for over the Mar. 5-7 weekend, the sixth-biggest opening ever. The movie also set other records: the biggest debut for March and for a 3-D film, the largest opening weekend for the year, and the best-ever Imax opening, Hollywood.com Box-Office said.

In a Mar. 7 note, Mitchelson said the film grossed $210 million worldwide, leading him to a “very preliminary” ultimate profit estimate of $200 million. The analyst noted that it typically takes two to three weekends to make an accurate forecast.

“In our view, this kicks off a content recovery for Disney, which has been in an 18-month dry spell with duds like ‘Bedtime Stories’, ‘G-Force’ and ‘A Christmas Carol’, and overcoming tough comps against ‘High School Musical’,” the analyst wrote. “Looking forward, we believe Disney’s line-up has as much assurance of success as the movie business allows, with films like ‘Toy Story 3′ (June 18) this summer, ‘Cars 2′ (July) and ‘Pirates 4′ (July) [in 2011], and two original Pixar movies in 2012, the first time 2 Pixar movies will be released in a single year”.

He also noted that new studio management has “aggressively addressed costs … including essentially shutting down Miramax”. Mitchelson said he believes Disney’s stock has “significant upside”.

The analyst has a $39 price target on Disney shares.

Hewlett-Packard Co.: Thomes Weisel Partners analyst Doug Reid reiterated his overweight rating on shares of Hewlett-Packard Co. (HPQ) on Mar. 8.

On Mar. 5, the world’s largest personal-computer maker revised its first-quarter results, cutting profit by 3 cents a share, after a U.K. lawsuit against its Electronic Data Systems unit increased its legal costs. The new net income figure is $2.25 billion, or 93 cents a share, down from the $2.32 billion, or 96 cents, reported on Feb. 17. Excluding some costs, the profit was $1.07 a share, compared with $1.10 in the earlier report.

Hewlett-Packard increased its legal reserve fund after a London court ordered EDS to make an interim payment of about $112 million to British Sky Broadcasting. The court ruled in BSkyB’s favor in a dispute over a services contract between the companies. Justice Vivian Ramsey said EDS was liable for “fraudulent misrepresentation giving rise to damages.”

“The revision is unrelated to H-P’s strong business performance in the first quarter,” the company said in an e-mailed statement on Mar. 5.

“We do not expect the increased contingency reserve to impact our future HPQ EPS estimates”, wrote Reid in a Mar. 8 note, because the company has adequate reserves in place, in our opinion”. Reid said he believes the current litigation will have no impact on his revenue and EPS growth outlook for the company.

The analyst maintained his second-quarter revenue and non-GAAP EPS estimates of $29.57 billion and $1.04, respectively. Reflecting the restated January quarter results, Reid reduced his full year fiscal 2010 EPS estimate from $4.40 to $4.37. He maintained his revenue and EPS estimates of $128.7 billion and $4.89 for fiscal 2011.

Reid said he estimates that Hewlett-Packard will end the April quarter with a total cash and investment balance of $23.2 billion, vs. his prior estimate of $23.6 billion. “We do not expect the payments to have a material impact on HPQ’s cash balance,” the analyst wrote.

The analyst has a $60 price target on the shares.

PNC Financial Services Group Inc.: FBR Capital Markets analyst Paul Miller raised his rating on shares of PNC Financial Services Group Inc. (PNC) to outperform from market perform on Mar. 8.

Miller said in a note that the Pittsburgh-based banking company announced on Feb. 2 the sale of $3 billion of common equity and the planned sale of its investment servicing business as part of a capital plan to repay the $7.6 billion TARP investment. Miller said the expected boost to tangible common equity shifted its risk profile “to low risk from medium risk”.

“We expect this upgrade to be somewhat controversial due to investor concern surrounding the lower quality of earnings driven by purchase accounting accretion”, Miller wrote, which he figured added $3.17 to his $3.63 fiscal 2009 operating EPS estimate. “While we acknowledge that this earnings stream is lower quality,” Miller said. The analyst said he believes that nearly $1.50 of this accretion can be recaptured as it stems from higher-cost CDs, which are transitioning into lower-cost core deposits at a rate greater than PNC’s initial expectations, and as the non-credit-impaired loan customers refinance or reprice into normal balance sheet loans.

“PNC also has some of the strongest credit metrics relative to peers, which we believe should limit downside risk from current levels,” the analyst wrote. He said that if PNC recaptures any of the accretion from the non-credit-impaired portfolio, “it should provide upside to our estimated $5.00 to $6.00 range of ‘normal’ EPS”.

Miller lifted his price target on the shares to $65 from $55.

Brocade Communications Systems Inc.: Bank of America Merrill Lynch analyst Scott Craig reiterated his buy recommendation on shares of Brocade Communications Systems Inc. (BRCD) on Mar. 8.

In a note, Craig said he was lowering estimates on the maker of networking gear that connects storage computers as he expects the company’s sales focus to shift from the storage business to the IP/Ethernet market in the fiscal 2010 second quarter, and “given transitions can be challenging, we are now being a little more conservative”.

The analyst said he expects Brocade to report fiscal 2010 revenue growth of 7%, vs. the company’s guidance of 8% to 12%. “We expect downward pressure on margins predicated on more aggressive pricing in the IP/Ethernet business, lower overall volume, and incremental investments in the IP/Ethernet business,” Craig said.

Craig cut his fiscal 2010 revenue estimate to $2.08 billion from $2.12 billion, and expects fiscal 2011 revenue of $2.28 billion. He lowered his fiscal 2010 EPS estimate to 54 cents from 55 cents on the lower revenue outlook. He reduced his fiscal 2011 EPS estimate to 59 cents from 62 cents on his expectation of a higher tax rate (28%, vs. 25% to 26% in fiscal 2010) and lower revenues.

The analyst maintained his price objective of $8 on the shares.

Notable Wall Street analyst opinions on stocks in the news for the week of Feb. 22-Feb. 26:

Feb. 22

Lowe’s Cos.: Oppenheimer analyst Brian Nagel maintained an outperform rating on shares of Lowe’s Cos. (LOW) on Feb. 22.

Lowe’s, the second-largest U.S. home-improvement retailer, posted fourth-quarter profit on Feb. 22 that exceeded analysts’ estimates. Net income rose 27% to $205 million, or 14 cents a share, from $162 million, or 11 cents, a year earlier. Analysts projected 12 cents, the average of estimates in a Bloomberg survey.

In a Feb. 22 note, Nagel said he looked “very favorably” upon the better-than-expected fourth-quarter results, noting that sales trends at the chain accelerated from prior periods and “presumably improved through the quarter”. Nagel said better than forecast gross margins suggest a sales mix shift to more profitable products, and that improving sales trends more than offset somewhat higher expenses.

“We look upon LOW’s new $5 billion share repurchase authorization as a significant vote of confidence from management and the board,” said Nagel.

The analyst has a 12-18 month price target of $32 on the shares.

Schlumberger Ltd.: Morgan Stanley analyst Ole Slorer maintained an overweight rating on shares of Schlumberger Ltd. (SLB) on Feb. 22.

On Feb. 21, Schlumberger, the world’s largest oilfield-services company, said it will buy Smith International Inc. for about $11 billion in an all-stock transaction, gaining sole ownership of the biggest drilling-fluids provider. Smith (SII) holders will get 0.6966 Schlumberger share for each share they hold, the companies said in a statement. Based on Schlumberger’s Feb. 19 closing price, the purchase is valued at $11 billion.

Slorer said in a Feb. 22 note that he believes Smith is a “natural fit” for Schlumberger. The analyst said the Smith acquisition will position Schlumberger as the dominant service company in deepwater and global shale gas developments –”two pillars of the next energy cycle, in our view”. The analyst does not expect a second suitor to make a rival bid for Smith.

Slorer said he would use short-term weakness in Schlumberger stock as an opportunity to accumulate the shares in what he expects to be a “highly accretive” transaction over the long run. He anticipates the transaction will close before the end of 2010, as announced by Schlumberger.

The analyst has a $130 price target on Schlumberger shares.

Feb. 23

Home Depot Inc.: Bank of America Merrill Lynch analyst Alan Rifkin reiterated a buy rating on shares of Home Depot Inc. (HD) on Feb. 23 after the largest U.S. home-improvement retailer reported a fourth-quarter profit that topped analysts’ estimates and raised its dividend for the first time since 2006.

On Feb. 23, Home Depot said net income totaled $342 million, or 20 cents a share, in the three months ended Jan. 31, compared with a loss of $54 million, or 3 cents, a year earlier. Excluding some items, earnings were 24 cents a share, above the 16 cent average of 25 estimates compiled by Bloomberg.

Rifkin said in a note that the company’s earnings per share excluding items were 9 cents ahead of his 15 cents estimate, and above the company’s earlier guidance of 13 cents. He noted that gross margin increased 32 basis points to 34.41%, while the company’s earnings before interest and taxes (EBIT) margin increased 52 basis points to 4.99%.

Rifkin said Home Depot posted same-store sales growth of 1.2%, vs. his -4% estimate. , marking the first positive comparison since the first quarter of 2006. He estimates that store traffic increased 2.9%, while the average sales ticket declined 1.7%, to $50.01.

The analyst said Home Depot management expects 2010 earnings per share (EPS) of $1.79, a 15.5% increase, with same-store sales growth of 2.5%. Reflecting better-than-expected fourth-quarter results and the company’s 2010 outlook, Rifkin raised his EPS estimates for 2010 to: $1.79 from $1.75; for 2011 to $2.12 from $2.00; and for 2012 to $2.35 from $2.25.

The analyst said Home Depot remains one of his top picks for 2010. He has a $35 price target on the stock.

Kraft Foods Inc.: Credit Suisse analyst Robert Moskow said on Feb. 23 that the firm was reinstating coverage on shares of Kraft Foods Inc. (KFT) with an outperform rating.

In a note, Moskow said he was forecasting EPS of $2.15 for 2010 and $2.45 for 2011, both above the respective Wall Street consensus estimates of $2.10 and $2.31. The analyst said he finds “the risk-reward attractive because of potential upward momentum in operating margins over the next 12 months fueled by acquisition synergies”. Kraft is in the process of acquiring British confectioner Cadbury.

“Kraft plus Cadbury is now a $50 billion company with much more scale and exposure to developing markets,” the analyst wrote.

Moskow has a price target of $35 on the shares.

Feb. 24

Apple Inc.: Kaufman Bros. analyst Shaw Wu reiterated a buy rating on shares of Apple Inc. (AAPL) on Feb. 24.

In a note, the analyst said that based on his industry and supply chain checks, “[w]e are picking up that supplies of MacBook Pro in the distribution channel are becoming fairly limited at two to three weeks vs. a more normal four to six weeks”. Wu said he believes this could be due to strong demand “and/or a pending product refresh” as inventory levels are worked down.

Wu also said he has noticed that Intel is shipping in volume its next-generation of mobile processors, codenamed Arrandale, based on its Nehalem architecture for servers. The new mobile architecture features “much better performance through hyper-threading and turbo mode, battery life, and weight characteristics, which we believe give AAPL engineers more room to further differentiate the MacBook Pro”, said Wu. “We believe new Mac models could ship in the March quarter, or at the latest the June quarter”.

The analyst said he believes a refresh of the MacBook Pro makes sense, as the last time it was updated was in June 2009 and its entry-level $1,199 model has some overlap with the $999 MacBook, which was refreshed in October 2009 ahead of the holiday selling period.

“We continue to believe that Apple is positioned to outperform in this tough macroeconomic environment with its defensible strategic and structural advantages and its vertical integration,” Wu wrote.

The analyst has a $253 price target on the shares.

Medco Health Solutions Inc.: BMO Capital Markets analyst Dave Shove reiterated his outperform rating on shares of Medco Health Solutions Inc. (MHS) on Feb. 24.

Medco, the largest U.S. pharmacy benefits manager by revenue, said on Feb. 23 that fourth-quarter earnings rose 24% as the company’s more-profitable business supplying mail-order generic drugs expanded. Net income climbed to $341.5 million, or 70 cents a share, from $274.4 million, or 54 cents a share. Earnings excluding one-time items were 76 cents a share, beating the average estimate of 75 cents from 26 analysts surveyed by Bloomberg. The company reaffirmed fiscal 2010 earnings per share (EPS) guidance of $3.28-$3.38.

Shove said in a note that Medco produced a “solid” fourth-quarter performance, contributing to record results in fiscal 2009. He noted that “80% of 2010 renewals have been completed, generic penetration continues to grow, and new sales are still rolling in”. He said the company continues to invest in new business platforms to fuel future growth.

“We like the story, we like the model, and we really like the earnings trajectory,” Shove wrote. His forecasts call for EPS estimates of $3.34 for 2010 and $4.10 for 2011, representing earnings growth of 15% and 23%, respectively.

The analyst also reiterated his $80 price target on the shares.

Feb. 25

Goodyear Tire & Rubber Co.: KeyBanc Capital Markets analyst Saul Ludwig maintained a buy rating on shares of Goodyear Tire & Rubber Co. (GT), the biggest U.S. tiremaker, on Feb. 25.

In a note, Ludwig said that the company’s fourth-quarter 2009 earnings per share (EPS) of 14 cents, reported on Feb. 18, topped his estimate of 4 cents. “In general, there were no major 4Q09 surprises, but rather than dissecting 4Q09 further, we believe what lies ahead is much more important,” the analyst wrote.

Ludwig noted that on Feb. 24, the company promoted Richard J. Kramer to chief executive officer to replace Robert J. Keegan, who will remain as executive chairman. “Kramer is smart, has strong interpersonal skills, is strong in finance and has exceptional support from his team members at GT,” Ludwig wrote. “We view this expected promotion of Mr. Kramer to CEO as a positive move for GT and its management team”.

Important factors in the company’s earnings for 2010 will be its ability to price its products to offset raw material cost increases in the second half of the year and its success in mitigating currency devaluation in Venezuela, Ludwig said. He said improving demand, low fill rates (i.e., shortages) and inventories at 10-year low levels “will pave the way for GT — and its competitors — to increase prices this spring”. The analyst also noted favorable potential for several new, higher margin products.

Ludwig lowered his 2010 EPS estimate from $1.00 to $0.85. His first-quarter 2010 estimate remains a loss of 7 cents; he set an initial estimate for 2011 of $1.50 EPS.

“We remain positive in our view toward GT,” Ludwig said. He maintained his $19 price target on the shares.

Limited Brands Inc.: Cowen & Co. analyst Laura Champine reiterated a neutral rating on shares of Limited Brands Inc. (LTD) on Feb. 25.

On Feb. 24, the owner of Victoria’s Secret and Bath & Body Works chains reported fourth-quarter profit excluding some items of $1.01 a share. The average analyst estimate in a Bloomberg survey was 99 cents a share.

In a note, Champine said that Limited’s fourth-quarter EPS was four cents ahead of her estimate, on previously announced same-store sales growth of 1% vs. a 10% decline one year earlier. She said Limited’s gross margin of 40.8% was 90 basis points higher than her estimate.

“We believe that tighter inventory management limited the need for the massive markdowns seen in Q4 [of 2008] and boosted merchandise margins,” Champine said. “[W]e would not expect to see any meaningful operating expense leverage in FY10″.

Champine said Limited’s management expects first-quarter operating EPS to be 5 cents to 10 cents on total company same-store sales growth of 2%; the company’s guidance for fiscal 2010 stands at $1.40 to $1.60. Limited also revised its February same-store sales outlook from flat to a high single-digit to low-double-digit increase, which may imply “very strong” Valentine’s Day sales this year, the analyst said.

Champine raised her first-quarter operating EPS estimate by 2 cents to 6 cents and expects operating EPS of $1.44 in fiscal 2010, 2 cents above the Wall Street consensus view. Her fiscal 2011 operating EPS estimate of $1.52 is 11 cents below the consensus view.

Feb. 26

American International Group Inc.: Standard & Poor’s equity analyst Catherine Seifert maintained a hold recommendation on shares of American International Group Inc. (AIG) on Feb. 26.

AIG, the insurer rescued by the U.S., posted a fourth-quarter loss on Feb. 26 on charges tied to paying down its bailout debt and boosting commercial insurance reserves. The net loss of $8.87 billion, or $65.51 a share, narrowed from $61.7 billion, or a reverse-split adjusted $458.99, a year earlier when AIG posted the biggest loss in U.S. corporate history. The operating loss, which excludes some investment results, was $53.23 a share, missing the $3.94 average loss estimate of three analysts surveyed by Bloomberg.

Seifert said in a posting on the S&P MarketScope service that AIG’s fourth quarter operating loss per share of $52.53, vs. a $287.69 loss one year earlier, and full-year $46.40 loss, vs. a $395.28 loss, reflected numerous unusual items excluded from her operating EPS estimates of $2.00 for the fourth quarter and $3.51 for all of 2009.

“Our takeaway from these results is that AIG’s core insurance units remain weak, and that a high degree of execution risk remains in AIG’s turnaround strategy, the analyst wrote.

Seifert cut her price target on the shares by $2 to $30, under the assumption that AIG trades at a discount to its stated book value. Seifert said she believes AIG’s tangible common equity, which was a deficit of $162.06 per share at Sept. 30, is still negative.

Palm Inc.: BMO Capital Markets analyst Tim Long maintained an underperform rating on shares of Palm Inc. (PALM) on Feb. 26.

Palm, the maker of the Pre phone, said after the close of trading Feb. 25 that sales this year will be “well below” its forecast because customers aren’t buying devices as quickly as expected. The company had initially projected sales of at least $1.6 billion for the year ending in May. Revenue in the fiscal third quarter will be $310 million at most, Palm said. Analysts projected $409.3 million, according to the average estimate in a Bloomberg survey.

In a Feb. 26 note, Long said that Palm’s update third-quarter revenue guidance was well below his estimate of $379 million and even further below the Wall Street consensus view of $425 million. Long also noted that Palm indicated that fiscal 2010 revenues would fall below its previously forecasted range of $1.6 billion to $1.8 billion.

Long said he believes the company expected Verizon Wireless to drive increased revenue in the second half of fiscal 2010. “[w]e believe sell-through has lagged because carrier promotion was limited, and Palm is shipping what is essentially a six-month old device [the Pre] with limited differentiation,” the analyst said. Long added that he thinks Palm now has “sizeable” channel inventory issues at Sprint and Verizon, “which will make for an even tougher fourth-quarter as their lineup ages”.

The analyst lowered his pro forma estimates for fiscal 2010 to a loss of $1.36 per share from a loss of $1.04; and for fiscal 2011 to a loss of $1.11 per share from a loss of 87 cents. He also lowered his price target on the shares to $5 from $9.

American International Group Inc.: Standard & Poor’s equity analyst Catherine Seifert maintained a hold recommendation on shares of American International Group Inc. (AIG) on Feb. 26.

AIG, the insurer rescued by the U.S., posted a fourth-quarter loss on Feb. 26 on charges tied to paying down its bailout debt and boosting commercial insurance reserves. The net loss of $8.87 billion, or $65.51 a share, narrowed from $61.7 billion, or a reverse-split adjusted $458.99, a year earlier when AIG posted the biggest loss in U.S. corporate history. The operating loss, which excludes some investment results, was $53.23 a share, missing the $3.94 average loss estimate of three analysts surveyed by Bloomberg.

Seifert said in a posting on the S&P MarketScope service that AIG’s fourth quarter operating loss per share of $52.53, vs. a $287.69 loss one year earlier, and full-year $46.40 loss, vs. a $395.28 loss, reflected numerous unusual items excluded from her operating EPS estimates of $2.00 for the fourth quarter and $3.51 for all of 2009.

“Our takeaway from these results is that AIG’s core insurance units remain weak, and that a high degree of execution risk remains in AIG’s turnaround strategy, the analyst wrote.

Seifert cut her price target on the shares by $2 to $30, under the assumption that AIG trades at a discount to its stated book value. Seifert said she believes AIG’s tangible common equity, which was a deficit of $162.06 per share at Sept. 30, is still negative.

Palm Inc.: BMO Capital Markets analyst Tim Long maintained an underperform rating on shares of Palm Inc. (PALM) on Feb. 26.

Palm, the maker of the Pre phone, said after the close of trading Feb. 25 that sales this year will be “well below” its forecast because customers aren’t buying devices as quickly as expected. The company had initially projected sales of at least $1.6 billion for the year ending in May. Revenue in the fiscal third quarter will be $310 million at most, Palm said. Analysts projected $409.3 million, according to the average estimate in a Bloomberg survey.

In a Feb. 26 note, Long said that Palm’s update third-quarter revenue guidance was well below his estimate of $379 million and even further below the Wall Street consensus view of $425 million. Long also noted that Palm indicated that fiscal 2010 revenues would fall below its previously forecasted range of $1.6 billion to $1.8 billion.

Long said he believes the company expected Verizon Wireless to drive increased revenue in the second half of fiscal 2010. “[w]e believe sell-through has lagged because carrier promotion was limited, and Palm is shipping what is essentially a six-month old device [the Pre] with limited differentiation,” the analyst said. Long added that he thinks Palm now has “sizeable” channel inventory issues at Sprint and Verizon, “which will make for an even tougher fourth-quarter as their lineup ages”.

The analyst lowered his pro forma estimates for fiscal 2010 to a loss of $1.36 per share from a loss of $1.04; and for fiscal 2011 to a loss of $1.11 per share from a loss of 87 cents. He also lowered his price target on the shares to $5 from $9.

Wynn Resorts Ltd.: Oppenheimer analyst David Katz reiterated an outperform rating on shares of Wynn Resorts Ltd. (WYNN) on Feb. 26.

Wynn Resorts, the casino company founded by Steve Wynn, reported fourth-quarter earnings on Feb. 25 that missed analysts’ estimates after Las Vegas room rates tumbled. Excluding some items, profit of 8 cents a share fell short of the 14-cent average of 12 analysts’ estimates compiled by Bloomberg. The company reported a net loss of $5.22 million, or 4 cents, compared with loss of $159.6 million, or $1.49 a share, a year earlier, which included additional tax costs.

Wynn Resorts’ quarterly results were in line with his expectations for weakness in Las Vegas and strength in Macau, Katz said in a Feb. 26. “We maintain our thesis that the Las Vegas Strip will remain pressured over the next 12-24 months, given the inflow of supply from the opening of CityCenter and economic weakness,” he wrote.

Despite the unstable environment on the Las Vegas Strip, Katz said he believes that Wynn’s exposure to the Macau market provides strong earnings in the present and future growth opportunities. He also said the company’s recently completed Hong Kong IPO positions it as “the best capitalized casino company in the industry”.

The analyst increased his price target to $74 from $73.

Fluor Corp.: R.W. Baird analyst Andrea Wirth lowered a rating on shares of Fluor Corp. (FLR) to neutral from outperform on Feb. 26.

On Feb. 25, Fluor, the largest publicly traded U.S. construction company, lowered its 2010 earnings forecast. Earnings per share this year will be $2.80 to $3.20, lower than an earlier forecast of $3.20 to $3.60, the company said in its fourth-quarter earnings report. Analysts projected $3.42, the average of 18 estimates in a Bloomberg survey.

Wirth said in a Feb. 26 note that the company’s fourth-quarter earnings per share of 82 cents compared with her estimate of 92 cents and the 88 cents consensus estimate of Wall Street analysts, noting lower profitability vs. her expectations. Wirth noted that the company’s backlog declined 4.5% sequentially, below management’s expectations for “meaningful reacceleration”. Wirth said Fluor cut 2010 EPS guidance by 12% at the midpoint to $2.80 to $3.20, vs the $3.46 Wall Street consensus view.

Wirth said Fluor’s margins are also expected to be negatively impacted as the company continues to thrive in the lower-margin mining sector, but will continue to see declining revenue in the relatively higher-margin oil and gas sector.

The analyst cut her price target on the shares to $47 from $59.

Goodyear Tire & Rubber Co.: KeyBanc Capital Markets analyst Saul Ludwig maintained a buy rating on shares of Goodyear Tire & Rubber Co. (GT), the biggest U.S. tiremaker, on Feb. 25.

In a note, Ludwig said that the company’s fourth-quarter 2009 earnings per share (EPS) of 14 cents, reported on Feb. 18, topped his estimate of 4 cents. “In general, there were no major 4Q09 surprises, but rather than dissecting 4Q09 further, we believe what lies ahead is much more important,” the analyst wrote.

Ludwig noted that on Feb. 24, the company promoted Richard J. Kramer to chief executive officer to replace Robert J. Keegan, who will remain as executive chairman. “Kramer is smart, has strong interpersonal skills, is strong in finance and has exceptional support from his team members at GT,” Ludwig wrote. “We view this expected promotion of Mr. Kramer to CEO as a positive move for GT and its management team”.

Important factors in the company’s earnings for 2010 will be its ability to price its products to offset raw material cost increases in the second half of the year and its success in mitigating currency devaluation in Venezuela, Ludwig said. He said improving demand, low fill rates (i.e., shortages) and inventories at 10-year low levels “will pave the way for GT — and its competitors — to increase prices this spring”. The analyst also noted favorable potential for several new, higher margin products.

Ludwig lowered his 2010 EPS estimate from $1.00 to $0.85. His first-quarter 2010 estimate remains a loss of 7 cents; he set an initial estimate for 2011 of $1.50 EPS.

“We remain positive in our view toward GT,” Ludwig said. He maintained his $19 price target on the shares.

Salesforce.com Inc.: Standard & Poor’s equity analyst Zaineb Bokhari maintained a sell recommendation on shares of Salesforce.com Inc. (CRM) on Feb. 25.

On Feb. 24, the largest seller of Internet-based customer-management software reported fourth- quarter profit that topped analysts’ estimates as more companies switched to online applications.

Bokhari said in a posting on the S&P MarketScope service that the company’s fourth-quarter EPS of 16 cents, vs. 11 cents one year earlier, was 2 cents over her estimate, on lower taxes. Sales of $354 million, up 7% from a year earlier, were $12 million above her view.

“We see CRM as [the] clear on-demand leader, but year-to-year growth (sales, bookings, deferreds) continues to slow,” Bokhari said. She noted that the company will expand distribution of its offerings, “but contrary to our prior view, does not plan to use recently raised capital to fund much M&A”.

The analyst cut her fiscal 2011 (ending January) EPS estimate by 26 cents to 60 cents on higher projected marketing and interest expense; she set a fiscal 2012 forecast at 71 cents. She lifted her 12-month price target by $2 to $68.

Limited Brands Inc.: Cowen & Co. analyst Laura Champine reiterated a neutral rating on shares of Limited Brands Inc. (LTD) on Feb. 25.

On Feb. 24, the owner of Victoria’s Secret and Bath & Body Works chains reported fourth-quarter profit excluding some items of $1.01 a share. The average analyst estimate in a Bloomberg survey was 99 cents a share.

In a note, Champine said that Limited’s fourth-quarter EPS was four cents ahead of her estimate, on previously announced same-store sales growth of 1% vs. a 10% decline one year earlier. She said Limited’s gross margin of 40.8% was 90 basis points higher than her estimate.

“We believe that tighter inventory management limited the need for the massive markdowns seen in Q4 [of 2008] and boosted merchandise margins,” Champine said. “[W]e would not expect to see any meaningful operating expense leverage in FY10″.

Champine said Limited’s management expects first-quarter operating EPS to be 5 cents to 10 cents on total company same-store sales growth of 2%; the company’s guidance for fiscal 2010 stands at $1.40 to $1.60. Limited also revised its February same-store sales outlook from flat to a high single-digit to low-double-digit increase, which may imply “very strong” Valentine’s Day sales this year, the analyst said.

Champine raised her first-quarter operating EPS estimate by 2 cents to 6 cents and expects operating EPS of $1.44 in fiscal 2010, 2 cents above the Wall Street consensus view. Her fiscal 2011 operating EPS estimate of $1.52 is 11 cents below the consensus view.

GameStop Inc.: Piper Jaffray analyst Anthony Gikas lowered his rating on shares of GameStop Inc. (GME) to neutral from overweight and cut his price target for the shares to $16 from $24 on Feb. 25.

In a note, Gikas said it is becoming more evident that interactive game sales are shifting from packaged goods to digital, with packaged goods game sales declining from around 85% of category sales to nearly 70% during the past two years. “We expect the shift to digital entertainment will continue as the current video game cycle plateaus and declines during the next three years,” the analyst said. He expects industry-wide packaged goods game sales will peak during 2010, and GameStop will experience peak earnings during 2011.

“To be sure, GameStop’s business is not going away anytime soon,” the analyst wrote. Gikas expects GameStop will gain market share and grow its margins during 2010-2012, but will not offset sales declines related to the current hardware lifecycle and the shift to digital entertainment. He estimates EPS of $2.65 for fiscal 2010 and $2.80 for fiscal 2011.

“Although [GameStop's] valuation and cash flow characteristics look attractive, we find it difficult to recommend a business with little long-term earnings growth,” Gikas said.

Notable Wall Street analyst opinions on stocks in the news for the week of Feb. 16-Feb. 19:

Feb. 16

Autodesk Inc.: Goldman Sachs analyst Derek Bingham raised his rating on shares of Autodesk Inc. (ADSK) to buy from neutral on Feb. 16.

In a note, Bingham said his upgrade of the biggest maker of engineering-design software was based on his view that “the majority of macro indicators we track are now showing stability or

Improvement”, and his latest contacts with Autodesk customers “suggest improved momentum in the new year”.

“We believe that a firmer top-line can help to catalyze significant, sustained operating margin recovery from fiscal 2011 levels near 16% to prior peak levels of mid-to-high 20% over the next 3 years,” the analyst wrote.

Ahead of the company’s fourth-quarter fiscal 2010 earnings release on Feb. 23, Bingham lifted his fiscal 2011 non-GAAP EPS estimate from $1.06 to $1.12; he kept his fiscal 2012 projection at $1.50. He raised his 12-month price target to $30 from $27.

Teva Pharmaceutical Industries Ltd.: Deutsche Bank analyst David Steinberg reiterated his buy rating on shares of Teva Pharmaceutical Industries Ltd. on Feb. 16.

Teva, the world’s largest maker of generic drugs, said on Feb. 16 that fourth-quarter profit rose 28% on revenue from its top-selling product, the Copaxone multiple sclerosis treatment. Net income excluding costs linked to the 2008 purchase of Barr Pharmaceuticals Inc. climbed to $847 million, or 94 cents a share, from $662 million, or 80 cents. Earnings fell short of the average estimate of 95 cents a share from 19 analysts surveyed by Bloomberg.

Teva management reaffirmed its previous 2010 EPS guidance of $4.40 to $4.60 on revenue of approximately $16 billion.

In a note, Steinberg said that given the company’s “solid” revenue performance, he believes the slightly lower than expected bottom-line result vs. his forecast was attributable to the impact of foreign currency translation and a less favorable product mix, that resulted in higher revenues as well as higher operating expenditures; and higher than estimated losses from associated companies.

Steinberg noted that revenues were driven by strong year-over-year performances in all of Teva’s key geographic regions, benefiting from continued strong growth of the company’s key branded franchises including Copaxone and Azilect, and its respiratory business.

The analyst said that his buy rating is based on the company’s “still rich” generic pipeline; competitive advantages and efficiencies achieved via its global supply chain; continued strength from its branded, proprietary products; the “outstanding” track record of management; and synergies and revenue opportunities still to be derived from the acquisition of Barr Labs.

Steinberg has a 12-month price target of $68 on the stock.

Feb. 17

Whole Foods Market Inc.: Standard & Poor’s equity analyst Joseph Agnese raised his recommendation on shares of Whole Foods Market Inc. (WFMI) to hold from sell on Feb. 17. The largest U.S. natural-goods grocer reported higher than expected fiscal first-quarter earnings and raised its full-year profit forecast after the close of trading Feb. 16.

Whole Foods said 2010 earnings may total $1.20 a share to $1.25 a share in fiscal 2010 (ending September), up from a previous forecast of $1.05 to $1.10. Analysts predicted $1.09, the average of 16 estimates in a Bloomberg survey.

In a posting on the S&P MarketScope service on Feb. 17, Agnese noted that Whole Foods reported December-quarter EPS of 32 cents, vs. 20 cents one year earlier, 7 cents above his estimate. Agnese said comparable-store sales increased 3.5%, above his 3.0% estimate, reflecting growth in store traffic, improvement in average transaction sizes and easier comparisons. The analyst also said the company’s EBITDA margins widened “significantly more than we expected” as improvement in comparable-store sales led to increased operating leverage.

Noting that the “favorable” comparable-store trends have continued in the March quarter, Agnese raised his fiscal 2010 EPS estimate by 20 cents to $1.20 and his 12-month price target by $6 to $33.

Coinstar Inc.: Wedbush Morgan analyst Michael Pachter kept an outperform rating on shares of Coinstar Inc. (CSTR) on Feb. 17. On Feb. 16, the company’s Redbox unit, which rents movies for $1 a day from vending machines, reached an agreement with Warner Bros. that gives the studio 28 days to sell DVDs before they become available in the company’s kiosks. The two-year accord ends a lawsuit Redbox filed against the Time Warner Inc. (TWX) film studio in August to gain access to the latest movies.

As a result of the agreement, Coinstar said it expects first-quarter revenue of $315 million to $335 million and fully diluted earnings of 8 cents to 14 cents a share. The company also reaffirmed previous guidance for 2010, predicting revenue of $1.47 billion to $1.57 billion and earnings of $1.50 to $1.65 a share on a fully diluted basis.

In a Feb. 17 note, Pachter said the settlement is a positive step in Coinstar’s “tense” relationships with film studios (lawsuits against Fox and Universal remain outstanding).

Pachter cut his $1.52 billion 2010 revenue estimate to $1.48 billion, reflecting some loss of business due to the 28-day window. He said he still sees $1.75 EPS in 2010, and maintained a $35 target price on Coinstar shares.

Feb. 18

Wal-Mart Stores Inc .: Goldman Sachs analyst Adrianne Shapira reiterated a buy rating on shares of Wal-Mart Stores Inc. (WMT) on Feb. 18.

The world’s largest retailer reported fourth-quarter sales that trailed its projection on Feb. 18 after cutting grocery and electronics prices. Sales at U.S. stores open at least a year fell 1.6%; Wal-Mart had projected sales to decline no more than 1%. Net income in the fourth quarter ended Jan. 31 increased 22 % to $4.63 billion, or $1.21 a share, from $3.79 billion, or 96 cents, a year earlier. Excluding a tax benefit and a restructuring charge, profit totaled $1.17 a share, topping the $1.12 expected by analysts. Revenue advanced 4.5% to $113.7 billion, trailing analysts’ estimates.

The retailer forecast first-quarter comparable-store sales in the U.S. to be unchanged, plus or minus 1%. First-quarter profit will be 81 cents to 85 cents a share, Wal-Mart said. Analysts on average anticipate 85 cents.

In a note to clients, Shapira said that Wal-Mart’s fourth-quarter operating earnings per share (EPS) of $1.17 surpassed her forecast of $1.12 and the company’s guidance of $1.08-$1.12. Shapira said better than anticipated gross margin improvement, expense control, and foreign currency gains “drove the quarter’s upside”. She noted that same-store sales declined 1.6%, as she had expected, due to price deflation within the food and consumer electronic categories.

“While current sales trends are being hampered by food and consumer electronics deflation, firs-quarter [sales] should be the last tough comparison as pressure should moderate and deliver better second-half [sales] against easy year-ago comparisons,” Shapira said.

Shapira’s price target remained unchanged at $58. The stock is included in Goldman’s Americas Buy List.

Hewlett-Packard Co.: Raymond James analyst Brian Alexander maintained a strong buy rating on shares of Hewlett-Packard Co. (HPQ) on Feb. 18.

After the close of trading Feb. 17, HP, the largest personal-computer maker, posted fiscal first-quarter profit and sales that beat analyst estimates. Excluding some costs, first-quarter profit was $1.10 a share. Analysts projected a profit of $1.06, according to a Bloomberg survey. The company also raised its full-year forecast and said it would hire more salespeople this year.

In a note to clients, Alexander said HP reported “very strong” first-quarter results, with revenue growing 8% year-over-year to $31.2 billion. He said HP is “leveraging its portfolio breadth and scale to gain share in an improving IT demand environment”.

“HP is extremely well positioned to penetrate faster growing, higher margin segments of the IT ecosystem and will be a primary beneficiary of the catch-up period for enterprise IT investment in 2010,” Alexander wrote.

The analyst maintained a price target of $62.

Feb. 19

Dell Inc.: R.W. Baird analyst Jayson Noland maintained a neutral rating on shares of Dell Inc. (DELL) on Feb. 19. After the close of trading Feb. 18, the world’s third-largest personal-computer reported that holiday sales of low-priced PCs and higher component costs http://www.businessweek.com/news/2010-02-19/dell-declines-after-price-cuts-component-costs-crimp-earnings.html. Gross margin, the percentage of sales that remain after deducting production costs, was 17.4%, below the 18% projected on average by analysts.

Fourth-quarter net income slipped to $334 million, or 17 cents a share, from $351 million, or 18 cents, a year ago. Sales rose 16% to $14.9 billion, beating the average estimate of $13.8 billion. Profit before some costs was 28 cents a share.

Noland said in a Feb. 19 note that fourth-quarter earnings per share (EPS) and revenue figures exceeded the Wall Street consensus view. He said the revenue outperformance were due to better-than-expected results from the company’s hardware businesses. Noland noted that gross margins were down 90 basis points from the preceding quarter, which management attributed to increased contribution the Consumer segment and component constraints.

The analyst cut his $1.32 fiscal 2011 (ending January) EPS estimate to $1.26. He said he “remains on the sidelines” given concerns around the timing of a broad-based PC replacement cycle, the integration of the acquired Perot Systems unit, and further acquisitions. He has a $17 price target on the shares.

CBS Corp.: Goldman Sachs analyst Drew Borst reiterated a neutral opinion on shares of CBS Corp. (CBS) on Feb. 19.

After the close of trading Feb. 18, CBS, owner of the most-watched U.S. broadcast network, said fourth-quarter profit fell 57% after advertising sales dropped at its radio stations and billboard unit. Net income declined to $58.8 million, or 9 cents a share, from $136.1 million, or 20 cents, a year earlier. Excluding a writedown to the value of radio assets and other items, profit of 25 cents met the average of analysts’ estimates compiled by Bloomberg.

Borst said in a Feb. 19 note that the adjusted earnings per share (EPS) figure of 25 cents was in line with his estimate and the consensus view of Wall Street analysts. Revenue was 2% ahead of his estimate, but EBITDA (earnings before interest, taxes, depreciation and amortization) missed his estimate by 4% due to higher than expected operating expenses at the company’s entertainment division. Borst said CBS highlighted three themes for 2010, which he believes are largely factored into 2010 consensus estimates: better advertising trends, cost cutting, and rising retransmission fees from cable operators.

Borst noted that in a departure from the past, the company did not provide 2010 EBITDA guidance. He raised EPS estimates for 2010 to 93 cents from 90 cents; for 2011 to $1.13 from 98 cents; and for 2012 to $1.26 from $1.09. He also increased his 12-month price target to $14 from $13.

Dell Inc.: R.W. Baird analyst Jayson Noland maintained a neutral rating on shares of Dell Inc. (DELL) on Feb. 19. After the close of trading Feb. 18, the world’s third-largest personal-computer reported that holiday sales of low-priced PCs and higher component costs http://www.businessweek.com/news/2010-02-19/dell-declines-after-price-cuts-component-costs-crimp-earnings.html. Gross margin, the percentage of sales that remain after deducting production costs, was 17.4%, below the 18% projected on average by analysts.

Fourth-quarter net income slipped to $334 million, or 17 cents a share, from $351 million, or 18 cents, a year ago. Sales rose 16% to $14.9 billion, beating the average estimate of $13.8 billion. Profit before some costs was 28 cents a share.

Noland said in a Feb. 19 note that fourth-quarter earnings per share (EPS) and revenue figures exceeded the Wall Street consensus view. He said the revenue outperformance were due to better-than-expected results from the company’s hardware businesses. Noland noted that gross margins were down 90 basis points from the preceding quarter, which management attributed to increased contribution the Consumer segment and component constraints.

The analyst cut his $1.32 fiscal 2011 (ending January) EPS estimate to $1.26. He said he “remains on the sidelines” given concerns around the timing of a broad-based PC replacement cycle, the integration of the acquired Perot Systems unit, and further acquisitions. He has a $17 price target on the shares.

CBS Corp.: Goldman Sachs analyst Drew Borst reiterated a neutral opinion on shares of CBS Corp. (CBS) on Feb. 19.

After the close of trading Feb. 18, CBS, owner of the most-watched U.S. broadcast network, said fourth-quarter profit fell 57% after advertising sales dropped at its radio stations and billboard unit. Net income declined to $58.8 million, or 9 cents a share, from $136.1 million, or 20 cents, a year earlier. Excluding a writedown to the value of radio assets and other items, profit of 25 cents met the average of analysts’ estimates compiled by Bloomberg.

Borst said in a Feb. 19 note that the adjusted EPS figure of 25 cents was in line with his estimate and the consensus view of Wall Street analysts. Revenue was 2% ahead of his estimate, but EBITDA (earnings before interest, taxes, depreciation and amortization) missed his estimate by 4% due to higher than expected operating expenses at the company’s entertainment division. Borst said CBS highlighted three themes for 2010, which he believes are largely factored into 2010 consensus estimates: better advertising trends, cost cutting, and rising retransmission fees from cable operators.

Borst noted that in a departure from the past, the company did not provide 2010 EBITDA guidance. He raised EPS estimates for 2010 to 93 cents from 90 cents; for 2011 to $1.13 from 98 cents; and for 2012 to $1.26 from $1.09. He also increased his 12-month price target to $14 from $13.

Schlumberger Ltd.: Standard & Poor’s equity analyst Stewart Glickman maintained a hold opinion on shares of Schlumberger Ltd. (SLB) on Feb. 18.

Schlumberger, the world’s largest oilfield-services provider, is in advanced talks to buy drilling-fluids provider Smith International Inc. (SII), the Wall Street Journal reported on Feb. 19, citing people familiar with the negotiations.

“Strategically, we like the reported move,” wrote Glickman in a posting on the S&P MarketScope service. He noted that Schlumberger and Smith are already joint venture partners in the fluids company M-I Swaco (which accounts for about 50% of Smith’s revenues, and nearly 75% of its operating income), so “integration risk appears minimal”. Glickman also said that Smith has a strong market position in deepwater drilling, which he views as a strong growth catalyst for the industry in 2010 and 2011.

First Solar Inc.: Wedbush Morgan analyst Christine Hersey maintained a neutral rating on shares of First Solar Inc. (FSLR) on Feb. 19 but cut her price target after the world’s largest maker of thin-film solar power modules reiterated its prior 2010 sales and profit forecasts, disappointing investors who had expected an increase.

Hersey said in a note that the company’s fourth-quarter EPS of $1.65 and revenues of $641.3 million beat the Wall Street consensus estimate. She said she is cautious on First Solar as the focus now shifts to its 2010 outlook. Hersey said potential changes to the feed-in-tariff policy in Germany could impact results in 2010 and 2011, particularly if ground mounted systems are limited to so-called Brownfield sites. The analyst said project development risks could impact First Solar’s ability to deploy large volumes of modules.

Hersey said she expects the company to experience margin contraction and pricing pressure. She cut her $6.28 2010 EPS estimate to $6.01 and her $6.74 2011 projection to $6.30. She also lowered her $125 price target to $110.