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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.

Amazon.com Inc. (AMZN)

BWS Financial upgrades to buy from neutral

After the close of trading Jan. 28, Amazon.com posted net income of $384 million, or 85¢ a share, for the fourth quarter, up 71% from year-ago net income of $225 million, or 52¢ a share. Founder and Chief Executive Jeff Bezos pointed to the popularity of the Kindle, the electronic book and periodicals reader now owned by millions of people.

Net sales rose 42% to $9.52 billion in the fourth quarter from $6.7 billion a year earlier. Excluding the $354 million favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales would have grown 37% vs. the year-ago quarter.

Kindle owners read a lot, and with both editions of the device Amazon has sold six Kindle books for every 10 physical books so far this year, Bezos said.

Books aren’t Amazon’s only strong suit. Worldwide sales of electronics and other general merchandise increased 60% to $4.61 billion and would have been up 54% excluding the favorable impact from year-over-year changes in foreign exchange rates throughout the quarter. Amazon’s acquisition of Zappos.com, completed Nov. 1, 2009, contributed about $200 million to fourth-quarter revenue.

Amazon expects net sales for the first quarter of 2010 to be $6.45 billion to $7 billion, up 32% to 43% from a year earlier. Operating income is projected to be $275 million to $365 million. This guidance includes roughly $110 million for stock-based compensation and amortization of intangible assets.

BWS Financial raised its rating on the stock to strong buy from sell on the strength of the latest earnings, singling out revenue that surpassed Wall Street analysts’ expectations. The boost in Amazon’s operating margins to 5% in the fourth quarter was the key reason for the upgrade, analyst Hamed Khorsand said in a Jan. 29 research note.

“[I]t seems the company has reached a revenue run rate where management cannot find anything to spend cash on,” Khorsand wrote. “The scale in operations that investors have been waiting for was present in the fourth quarter results and was indicated in the first quarter [forecast].”

Although Amazon will face some tough competition in the second half of each year, the Amazon.com brand continues to succeed, Khorsand wrote. He expects the company to generate more than $32.2 billion in revenue in 2010 and to post operating profit of $1.6 billion for the year. Khorsand also raised his price target for the stock to $200, saying the cash flow generated from operations makes him confident the shares will be able to advance strongly over the next 12 months. Amazon shares traded at $124.65 on Jan. 29.

Alaska Air Group Inc. (ALK)

Jesup & Lamont Securities reiterates hold

Next Generation Equity Research reiterates buy, raises target price

The parent company of Alaska Airlines jolted Wall Street on Jan. 28 with a fourth-quarter profit that was far smaller than expected, 12¢ per share compared with the 35¢ analysts had projected, leading to a 10% decline for the stock. The Seattle-based airline cited higher costs for compensation and environmental compliance. Revenue of $846.1 million topped forecasts of $826 million, according to Bloomberg News.

Next Generation analyst Dan McKenzie said in a Jan. 29 client note that he considered the quarterly miss a “one-off event” and called the 10% stock decline a market overreaction. He further noted that Alaska faces a far more benign competitive environment as many of its rivals have decreased capacity in direct competition by about 8%, which could help 2010 revenues. As a result, he raised his target price on the stock to $46 from $44. Alaska Air Group fell 3.5% to $31.43 in Friday trading. McKenzie also boosted his full-year profit forecast to $4.60 per share from $4.40, given that Alaska’s fuel hedging program is expected to help results in 2010.

“Separately, industry M&A is not finished in our view,” McKenzie wrote. “And given its attractive West Coast niche, Alaska fares well under consolidation scenarios. And while Alaska’s management has historically been opposed to M&A, we would argue the probability for a take-out going forward rises.”

Check Point Software Technologies Ltd. (CHKP)

Stifel Nicolaus downgrades to hold from buy

Check Point Software Technologies reported a profit of 61¢ a share in the fourth quarter, excluding one-off items, vs. 50¢ a year earlier on a 25% gain in revenue to $272 million. With its results, released Jan. 28, the Tel Aviv-based developer of Internet security software beat the consensus estimate of 57¢ in earnings and $257.76 million in revenue.

Check Point attributed the results to its April acquisition of Nokia’s (NOK) security appliance business and sales growth across all product lines and geographic regions, notably Asia-Pacific. The need for security has been highlighted recently by cyber attacks on Google’s (GOOG) operations in China. Check Point said it will likely make one or two small technology acquisitions per year and would also consider buying entire companies. Chief Executive Gil Shwed said on a conference call that he believes customers are relatively optimistic and that he is “seeing more interest in new projects.”

The company expects to earn 48¢ to 55¢ per share, excluding items, in the first quarter of 2010 on revenue of $232 million to $245 million. Earnings for the full year, excluding items, are projected at $2.20 to $2.30 per share on a revenue forecast of $990 million to $1.04 billion. The consensus estimate among analysts is for a first-quarter profit of 53¢ on revenue of $237.7 million and a full-year profit of $2.24 on $1.01 billion in revenue. Check Point also plans to expand its share repurchase program, spending as much as $250 million to buy shares this year.

Stifel Nicolaus (SF) analyst Todd Weller lowered his rating on the stock to hold from buy but said the company’s “very solid” fourth-quarter results weren’t a factor in the downgrade. He said in a research note on Jan. 29 that the valuation has returned to more normal levels due to market sentiment and positive earnings, plus the business growth effects from the Nokia acquisition. Those factors had underpinned Stifel’s upgrade of the stock last year. Check Point shares dropped 4.8% to $31.94 in Friday trading.

“We feel Check Point’s growth profile has improved,” Weller’s note said. “However, our feeling is that Check Point should still be viewed as a 10% grower on an organic basis.”

Notable Wall Street analyst opinions on stocks in the news for the week of Nov. 23-27:

Nov. 27

QLT Inc. (QLTI)

RBC Capital upgrades to outperform from sector perform; raises price target

RBC Capital analyst Douglas Miehm said on Nov. 27 that QLT reached a settlement with Massachusetts General Hospital (MGH) in its litigation over royalties for its Visudyne treatment for wet age related macular degeneration;; the company will pay MGH $20 million for full payment of all past and future royalty obligations. Miehm said the settlement was much better than he expected.

To account for the better-than-expected settlement, Miehm narrowed his 26 cents 2011 loss per share estimate to a 24 cents loss. He upgraded the shares as he believes they are being undervalued by the market. He raised his price target to $6.00 from $4.50.

Theravance Inc. (THRX)

Cowen & Co. maintains neutral

Cowen analyst Ian Sanderson said on Nov. 27 that the FDA review deadline for the company’s Vibativ compound for treatment of nosocomial pneumonia (NP) was Nov. 26; he and other Wall Street analysts see an approval delay — likely in form of a complete-response letter. Sanderson said the key regulatory hurdle may be numerically higher mortality rates for Vibativ vs. vancomycin in Phase III trials. He sees approval for Viative for treatment of NP in the second half of 2010.

The analyst noted that with slow rollout in complicated skin and skin structure infections indication projected for Vibativ, low visibility in terms of timing, and the outcome of the anti-infective advisory committee review of the NP indication, he keeps his neutral rating on the shares.

Nov. 25

Microsoft (MSFT)

Collins Stewart rates buy

Jefferies & Co. rates buy

Credit Suisse rates outperform

Analysts cautioned on Nov. 25 not to read too much into the coming departure of Microsoft Corp. finance chief Chris Liddell, which was announced the previous day.

Liddell joined Microsoft in 2005, and this year led an effort to cut $3 billion from the company’s costs amid the recession. The plan included Microsoft’s first mass layoffs. Liddell will step down as CFO on Dec. 1 and be replaced by Peter Klein, Microsoft said. Klein, 47, joined Microsoft in 2002 and currently is responsible for the books at the division that produces Microsoft Office and other business programs.

Collins Stewart analyst Sandeep Aggarwal in a note to investors said Liddell “has done a great job at Microsoft for the past four and half years and he now wants to take a ‘CEO type’ of role.”

Katherine Egbert, an analyst at Jefferies & Co., also said she thinks Liddell wants to move into a CEO role. “We don’t believe Mr. Liddell was forced out, nor do we think he is leaving under untoward circumstances,” she wrote in a note to investors. Egbert said Klein seems a “competent replacement” for Liddell.

Credit Suisse analyst Philip Winslow said he is “encouraged by Microsoft’s selection to replace Chris Liddell and believe that Peter Klein’s track record suggests he will continue the focus on cost efficiency championed by Liddell.”

TiVo Inc. (TIVO)

Standard & Poor’s Equity Research maintains buy

S&P equity analyst Tuna Amobi said on Nov. 25 that TiVo’s October-quarter operating loss per share of 6 cents, which compared with a year earlier loss of one cent, matched his estimate. He noted worse-than-projected subscriber losses, with other “lackluster” metrics, as TiVo guided expectations for January-quarter results to a $5 million-$7 million adjusted EBITDA loss and a $13 million-$15 million net loss.

Amobi sees further crucial traction on distribution and audience measurement, underscored by TiVo’s latest pacts with Virgin Media (VMED) and Google Google (GOOG), among key strategic partnerships with potential long term upside.

With an imminent ruling on the company’s litigation with Dish Network Corp. (DISH) viewed as pivotal to TiVo’s patent momentum, the analyst keep his $14 price target.

Nov. 24

Hewlett-Packard (HPQ)

Deutsche Bank keeps hold; raises estimates, price target

Hewlett-Packard Co. shares slipped Nov. 24 after the computer and printer company’s fourth-quarter results showed weakness in its core businesses and that growth in PC shipments were accomplished at lower prices. Deutsche Bank analyst Chris Whitmore said without the boost from technology services, revenue would have fallen by 13% from a year ago, excluding the effects of foreign currency fluctuations.

While he raised his revenue and earnings estimates for HP, as well as his price target, Whitmore kept his hold rating because of downward pressure in HP’s printing business. He said printer revenue in the quarter came in softer than expected and that he sees HP stepping up efforts to regain market share. Such actions usually include larger discounts.

Sales in China were a bright spot in the quarter, up 20 percent year-over-year, but Whitmore said margins were down indicating that HP sold more PCs but of the cheaper variety. Windows 7 did provide a boost to sales, however, the analyst said in a research note.

Whitmore raised his fiscal 2010 revenue forecast to $119.4 billion from $116.7 billion, and earnings to $4.35 per share from $4.20. He also increased his price target to $52 from $44.

Nov. 23

Goldman Sachs Group (GS)

Bernstein lifts estimates

Despite a likely end-of-year slowdown in fixed-income trading, Goldman Sachs will top Wall Street expectations by cutting the percentage of sales it sets aside as compensation, Bernstein analyst Brad Hintz said on Nov. 23. Hintz also added that the seasonal slowdown doesn’t signal that the bank’s ability to profit from a recovery in credit markets has ended.

In a Nov. 23 note to investors, Hintz boosted his earnings estimates for 2009, even though sales from trading of fixed income products — corporate and government bonds, currencies and commodities — historically have slowed at the end of the year as traders cut risk and banks typically reduce lending.

Fixed-income sales and trading has helped buoy Goldman’s results for two straight quarters.

Hintz said that Goldman will likely compensate for the seasonal slowdown by cutting the percentage of sales it sets aside to compensate employees. Over the past year, Goldman has accrued $16.7 billion for employee compensation — that’s 58 percent of pre-tax profit, he said, above 2006 and 2007 levels of 53 percent. He expects that ratio to be 36 percent in the fourth quarter. “This, of course, will substantially enhance bottom-line performance,” he said.

Hintz expects Goldman to earn $19.67 per share for the year, up from a prior estimate of $18.88. Goldman is expected to post fourth-quarter results in mid-January.

Ebay (EBAY)

Standard & Poor’s Equity Research upgrades to buy from hold

S&P equity analyst Scott Kessler said on Nov. 23 that eBay recently completed the sale of some 70% of Skype for $1.9 billion in cash and a $125 million note. Kessler sees this as good news for eBay, as it can better focus on core operations, redeploy the proceeds to pursue international growth opportunities via organic investment and/or mergers and acquisitions, and move past uncertainties related to now-resolved Skype-related legal matters.

Notwithstanding some recent search challenges on eBay.com that have been fully addressed, Kessler thinks eBay will perform well this holiday shopping season, and sees the stock as attractively valued. His 12-month price target remains $26.