Stock Picks: Intel, Google, Morgan Stanley
Intel Corp. (INTC)
R.W. Baird upgrades to outperform from neutral; raises price target
R.W. Baird analyst Tristan Gerra raised the firm's rating on Intel on Jan. 4, saying in a note that salesforce checks point to tier-1 PC original equipment manufacturers recently raising procurement estimates for the first half of 2010 on more optimistic customers' forecasts for the full year, in part on a rebound in corporate PC spending, with the adoption of Microsoft's (MSFT) Windows 7 operating system a catalyst. Gerra thinks this suggests a continuation of above-seasonal trends in PC shipments.
The analyst thinks Intel, the world's largest chipmaker, could outperform its peers this year, notably those with stretched lead times, as he expects lead times to come down in the second-quarter while wafer pricing could firm up in 2010. Gerra sees Intel posting earnings per share [EPS] of 66 cents in 2009, and raised his $1.40 2010 EPS view to $1.60 on 15% revenue growth. He also raised his price target on the shares from $24 to $26.
Google (GOOG)
Standard & Poor's Equity Research reiterates hold
S&P equity analyst Scott Kessler said in a Jan. 4 note that Google has scheduled a media event for Jan. 5, focused on its Android mobile platform. Kessler thinks Google will announce its highly anticipated Nexus One phone at the gathering, noting that a number of websites have recently published purported pictures and videos of, and descriptions and commentary about the expected device. Kessler said the expected handset seems to be largely modeled after Apple's (AAPL) iPhone and offers features not all that dissimilar from Motorola's (MOT) Droid.
"Despite the excitement, we wonder how more aggressive pursuit of the hardware side of the mobile market will affect GOOG's business model," wrote Kessler.
Morgan Stanley (MS)
UBS upgrades to buy from neutral
UBS analyst Glenn Schorr upgraded his recommendation on Morgan Stanley on Jan. 4. In a note to clients, Schorr said that while the investment bank's growth in earnings, return on equity, and book value will likely still be sluggish in the near term, he thinks some meaningful company-specific headwinds are dissipating. Schorr said the firm's capital and liquidity positions remain strong, its investment banking pipelines are building. Also, he noted, management is in the process of re-building the company's FICC and prime brokerage footprints, and the integration of the Morgan Stanley Smith Barney joint venture appears on track.
Schorr said he understands that Morgan Stanley "remains a work in progress", but believes the company has the potential to show year-over-year improvement in 2010. He has a $37 12-month price target.
