Source

“American International Group Inc. (NYSE: AIG) Raised to Outperform at Wells Fargo.

Dell Inc. (NASDAQ: DELL) Raised to Equal-weight at Morgan Stanley.

Foster Wheeler AG (NASDAQ: FWLT) Started as Overweight at JPMorgan.

Harley-Davidson, Inc. (NYSE: HOG) Raised to Buy at Citigroup.

KBR Inc. (NYSE: KBR) Started as Overweight at JPMorgan.

McDermott International Inc. (NYSE: MDR) Started as Overweight at JPMorgan.

Noble Corp. (NYSE: NE) Reiterated Buy with $50 target at Argus.

Platinum Group Metals Ltd. (NYSE: PLG) Cut to Neutral at Credit Suisse.

Randgold Resources Ltd. (NASDAQ: GOLD) target raised at Goldman Sachs.

Raymond James Financial Inc. (NYSE: RJF) Started as Outperform at Wells Fargo.

Saks Inc. (NYSE: SKS) Reiterated Buy with $14 target at Argus.

TiVo Inc. (NASDAQ: TIVO) Started as Neutral at JPMorgan.

Valero Energy Corporation (NYSE: VLO) Raised to Top Pick at Citigroup.

Veolia Environnement S.A. (NYSE: VE) Raised to Buy at Nomura.

Westport Innovations Inc. (NASDAQ: WPRT) Started as Overweight at Piper Jaffray.”

Comments »

“This morning, Morgan Stanley’s top equity strategist Adam Parker was on CNBC explaining his bearish outlook on stocks.

Sam Ro summarized Adam Parker’s beliefsin a post at the end of March.

1. “Lower forecast earnings growth and more concentrated earnings among S&P stocks.”
2. “Non-normalized interest rates and a vastly expanded Fed balance sheet.”
3. “Much higher commodity prices, particularly oil.”
4. “Index rebalancing has contributed to performance: 125 new firms have $82 billion more market cap than the outgoing companies had in 2006; also, 25% of income growth is from Apple.”

Parker’s conclusion:

“Don’t pay a higher multiple for today’s corporate earnings!”

For more on Parker’s negative outlook see here > “

Read more

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Hearing and seeing are two different things. Analyst have stated that they expect profit margins to rise. Here is a graphic of that interpretation that will make your jaw drop.

Source

“Let’s start off with a chart you’ve seen a bunch of times on these pages: It shows the record-high levels of profit margins, and the expectations among analysts that they’ll go even higher.

Click to enlarge.

 

 

The basic gist is that current bullish assumptions are based on a trend that at least taken at the simplest face value seems unrealistic.

Well, here’s another similarly jaw-dropping margins chart.

It shows the percentage of stocks that are assumed to be able to produce a margin expansion going into 2013.

 

 

89% of companies are expected to expand their margins in 2013.

With fiscal and monetary tightening possible, is that remotely possible?

Perhaps not.”

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Source 

“Earnings season kicks off tomorrow when aluminum giant Alcoa reports quarterly results.

Although most analysts see Alcoa posting a loss for the period, Bank of America is out with a new list of companies it sees beating both earnings and revenue forecasts.

Current estimates imply earnings growth of 3 percent, and top line growth of 4 percent for the S&P 500.

Lead analyst Dan Suzuki believes extremely low expectations heading into the quarter may give a number of firms a fair runway to beat.

“Tech remains one of our most preferred sectors, and has the highest proportion of stocks on our positive surprise screen for [the first quarter],” Dan Suzuki says.”In terms of growth expectations for the quarter, excluding Financials, Tech and Industrials have the highest year over year earnings growth expectations while Materials, Telecom and Utilities have expected earnings declines.”

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Source

Apple Inc. (NASDAQ: AAPL) Cut to Neutral at BTIG.

The Charles Schwab Corporation (NYSE: SCHW) Started as Neutral at Goldman Sachs.

Eaton Corporation (NYSE: ETN) named the value stock of the day at Zacks.

E*TRADE Financial Corporation (NASDAQ: ETFC) Started as Neutral at Goldman Sachs.

F5 Networks, Inc. (NASDAQ: FFIV) Cut to Hold at Stifel Nicolaus.

Huntington Bancshares Incorporated (NASDAQ: HBAN) Reiterated Neutral at Zacks.

LinkedIn Corporation (NYSE: LNKD) Started as Hold at Needham.

Mead Johnson Nutrition Company (NYSE: MJN) Reiterated Outperform with $82 target at Credit Suisse.

Pier 1 Imports Inc. (NYSE: PIR) Maintained Hold but raised estimates at Argus.

Randgold Resources Limited (NASDAQ: GOLD) Raised to Buy at Stifel Nicolaus.

SBA Communications Corporation (NASDAQ: SBAC) Raised to Buy at Citigroup.

TD Ameritrade Holding Corporation (NASDAQ: AMTD) Started as Neutral at Goldman Sachs.

Tyco International Ltd. (NYSE: TYC) Raised to Buy at Argus.

Walt Disney Co. (NYSE: DIS) Cut to Neutral at Citigroup.

Credit Suisse has previewed top banks and noted on Bank of America Corporation (NYSE: BAC), Citigroup Inc. (NYSE: C), and J.P. Morgan Chase & Co. (NYSE: JPM): “We look BAC, C and JPM to benefit from improved trading in 1Q.” The firm talked up loan growth and demand and sees attractive valuations with improved profitability and greater capital deployment.”

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Source

“Corporate earnings have surged recently, helping to push the Standard & Poor’s 500 Index up 30 percent from its October lows.

But stock analysts predict that earnings growth is about to plummet.

The Standard & Poor’s Capital IQ survey projects that profits increased 0.93 percent in the first quarter from a year earlier, The New York Times reports. That’s a 95 percent plunge from the 19.68 percent growth rate seen in the first quarter of 2011.

“It is the lowest quarter of growth we have seen since the third quarter of 2009,” Christine Short, senior manager for S&P Global Markets Intelligence, tells The Times.

Surveys from Thomson Reuters and FactSet show similar results.

So why is profit growth collapsing? First, companies have run out of ways to profit from cutbacks. Second, the impact of Europe’s debt crisis continues. And third, so does the impact of slowing global economic growth.

The effect on stocks may not be pretty. Barclays Capital expects the S&P 500 to fall a bit less than 10 percent if companies’ profit guidance doesn’t meet analysts’ expectations.

Another factor that could weigh on stocks is worry about the U.S. economy following Friday’s news that payrolls gained only 120,000 in March.

“What it calls into question and what the debate will be about is, once again, what is the pace of the recovery?” Mark Freeman, chief investment officer at Westwood Holdings Group, tells Bloomberg.”

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“U.S. investment bank Morgan Stanley has cut its forecast for the possibility the Federal Reserve will stimulate the economy via quantitative easing, putting the likelihood at one in three from a previous forecast of two out of three.

The Fed has slashed interest rates to near zero but when such traditional policies don’t work, it floods the economy with liquidity by buying assets from banks, a policy technically known as quantitative easing but dubbed by critics as printing money out of thin air.

Such policy, often a hot-button issue, sends stock price rising, the dollar weakening and inflationary pressures building….”

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Source

American International Group (NYSE: AIG) Reiterated Buy with $40 target at BofA/ML.

Comerica Incorporated (NYSE: CMA) Cut to Sell at Citigroup.

CNO Financial Group, Inc. (NYSE: CNO) Started as Buy with $9 target at Goldman Sachs.

Deere & Co. (NYSE: DE) Reiterated Buy with $104 target at BofA/ML.

Drill-Quip, Inc. (NYSE: DRQ) named as Bear of the Day at Zacks.

Google Inc. (NASDAQ: GOOG) Reiterated Buy with $730 target at Argus.

Huntington Bancshares Incorporated (NASDAQ: HBAN) Started as Neutral at Citigroup.

Jefferies Group, Inc. (NYSE: JEF) Raised to Buy at Rochdale Securities.

KeyCorp (NYSE: KEY) Raised to Buy at Citigroup.

NVIDIA Corporation (NASDAQ: NVDA) Started as Buy at Cantor Fitzgerald.

Oriental Financial Group Inc. (NYSE: OFG) named as value stock of the day at Zacks.

Panera Bread Company (NASDAQ: PNRA) Started as Outperform with $190 target at Credit Suisse.

Pandora Media, Inc. (NYSE: P) Started as Underweight at Barclays.

Public Service Enterprise Group Inc. (NYSE: PEG) Reiterated Buy with $40 target at Argus.

Regions Financial Corp. (NYSE: RF) Started as Neutral at Citigroup.

URS Corporation (NYSE: URS) Reiterated Underperform with $49 target at BofA/ML.

Veolia Environnement (NYSE: VE) Cut to Sell at Deutsche Bank.

Zumiez, Inc. (NASDAQ: ZUMZ) named as Bull of the Day at Zacks.

Comments »

Source

American International Group (NYSE: AIG) Raised to Outperform at Bernstein.

Bazaarvoice Inc. (NASDAQ: BV) Started as Neutral at Credit Suisse; Started as Overweight at Morgan Stanley; Started as Buy at Deutsche Bank..

Biogen Idec Inc. (NASDAQ: BIIB) Raised to Buy at Goldman Sachs.

Novo Nordisk A/S (NYSE: NVO) Cut to Sell at Deutsche Bank.

SanDisk Corporation (NASDAQ: SNDK) Cut to Outperform at RBC.

Sonoco Products Co. (NYSE: SON) Started as Equal-weight at Barclays.

Southwest Airlines Co. (NYSE: LUV) Raised to Overweight at Barclays.

Starbucks Corporation (NASDAQ: SBUX) Added to Conviction Buy List as Goldman Sachs.

Sysco Corporation (NYSE: SYY) Started as Sell at Goldman Sachs.

Tellabs Inc. (NASDAQ: TLAB) Raised to Neutral at JPMorgan.

United Continental Holdings, Inc. (NYSE: UAL) Cut to Equal-weight at Barclays.Blackstone Group L.P. (NYSE: BX) added to Top Pick list at Citigroup.

Ciena Corporation (NASDAQ: CIEN) Raised to Overweight at JPMorgan.

International Business Machines Corporation (NYSE: IBM) Cut to Neutral at BofA/ML.

McDonald’s Corporation (NYSE: MCD) removed from Conviction Buy List but maintained as Buy at Goldman Sachs.

Novo Nordisk A/S (NYSE: NVO) Cut to Sell at DB

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Full report

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Source 

“The research firm Retail Metrics is out signaling better than expected retail sales should be the norm this week when companies report their March same-store sales figures.  The report noted that February sales and traffic were strong with comparable sales up 4.2% and it expects that trend looks to have continued in March.

Many factors are cited: an earlier Easter holiday by 16 days this year, very favorable weather conditions, improving employment, well received colorful spring merchandise assortments, rising consumer confidence, and pent up demand.

While estimates have been moving higher, Retail Metrics expects that retailers should surprise on the upside for a fourth consecutive month.  It does warn, however, that the gains in March may come at the expense of April and it also noted that retailers face a very steep 8.7% comparison with April 2011 and that makes for an uphill battle.

The report noted that (after falling over the weekend) department store forecasts turned up and now stand at 4.2%.  Macy’s, Inc. (NYSE: M), Kohl’s Corporation (NYSE: KSS), and Nordstrom Inc. (NYSE: JWN) all experienced 20 basis point upward moves to their consensus estimates.  Other gains in expectations were as follows: The TJX Companies, Inc. (NYSE: TJX) with a 130 basis point rise; Ross Stores Inc. (NASDAQ: ROST) with a full 100 basis point rise; Zumiez, Inc. (NASDAQ: ZUMZ) with a 60 basis point rise; and eve Gap Inc. (NYSE: GPS) showing a 40 basis point rise.

Buckle Inc. (NYSE: BKE) is expected to be one of the surprise reduced forecasts by 70 basis points, but its stock is with 2% of a 52-week high.  Another large reduction was an 80 basis point tempering of expectations from the Wet Seal Inc. (NASDAQ: WTSLA) and its stock has been very weak in the last year.

We should be getting most of the same-store sales reports on Wednesday and Thursday of this week ahead of the Easter weekend.”

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Source

Apple Inc. (NASDAQ: AAPL) Started as Buy at Auriga; target raised to $715 at JPMorgan

Carnival Corporation (NYSE: CCL) named as Bear of the Day at Zacks.

Clean Energy Fuels Corporation (NASDAQ: CLNE) Started as Neutral at Macquarie.

Discover Financial Services (NYSE: DFS) named as Bull of the Day at Zacks.

Express Scripts Inc. (NASDAQ: ESRX) Started as Overweight at JPMorgan.

GNC Holdings Inc. (NYSE: GNC) Raised to Outperform at BMO.

Goldcorp Inc. (NYSE: GG) Started as Neutral at Citigroup.

Groupon, Inc. (NASDAQ: GRPN) Started as Neutral at Stern Agee.

Kinross Gold Corporation (NYSE: KGC) Started as Buy at Citigroup.

Netflix, Inc. (NASDAQ: NFLX) Cut to Equal-weight at Barclays.

Newmont Mining Corporation (NYSE: NEM) Cut to Neutral at Citigroup.

Philip Morris International, Inc. (NYSE: PM) Cut to Neutral at Credit Suisse.

Schlumberger Limited (NYSE: SLB) Raised to Buy at Stern Agee.

The Timken Company (NYSE: TKR) named as Value stock of the day at Zacks.

Urban Outfitters Inc. (NASDAQ: URBN) Raised to Neutral at Citigroup.

Comments »

Source 

“There’s been a lot of talk about corporate profit margins hitting record highs. (More on this later.)

UBS’s top equity strategist Jonathan Golub is out with new research today, warning that the risks to investing in stocks these days are weighted to the upside.

“[I]t increasingly appears that our very reasonable expectations for earnings and multiples may prove conservative,” he wrote.

His current year-end S&P 500 target is 1,475.

The source of upside surprise: profit margins.

We expect earnings growth of 5.2% in 2012 and 8.7% 2013. A weaker dollar, higher oil prices, and improving foreign sales could provide upside revenue surprises. Additionally, rising capacity utilization rates could drive operating margins to new highs.

Here are the charts he supplied:

 

 

 

 

Golub’s argument tying capacity utilization to profit margins is a simple and elegant one.

But is it too simple?

Many experts have sounded off on the profit margin issue, overwhelmingly arguing that margins are topping, or that they have already topped.

GMO’s James Montier tied record margins to soaring government deficits.  Building off of Montier’s work, John Hussman and BI’s Henry Blodget have argued that margins have peaked. Morgan Stanley’s David Greenlaw warned that the flattening of GDP combined with falling unemployment rates mean productivity is falling, which implies falling profit margins.  Goldman’s David Kostin doesn’t see a collapse, but he sees margins coming in lower than the rest of the street.

To be clear, Golub isn’t committing to this call for higher margins.  Rather, he is just pointing out that it’s an upside risk.”

Comments »

Source

“So, what’s next for stocks after the best quarter in 14 years?

Bank of America’s Savita Subramanian thinks they could head up much further.

According to the firm’s proprietary Sell Side Indicator, strategists’ bullishness receded in March to 55.8, marking the sixth decline in eight months.

From Subramanian’s note to clients:

With the S&P 500’s indicated dividend yield near 2%, that implies a 12-month price return of 12% and a 12-month value of 1580. Although this is not our official S&P 500 target, this model is an input into our target, which incorporates valuation, sentiment and technicals. Historically, when our indicator has been this low or lower, total returns over the subsequent 12 months have been positive 93% of the time, with median 12-month returns of +23%.

To be clear, this is a contrarian indicator:

The Sell Side Indicator is based on the average recommended equity allocation of Wall Street strategists as of the last business day of each month. We have found that Wall Street’s consensus equity allocation has historically been a reliable contrary indicator. In other words, it has historically been a bullish signal when Wall Street was extremely bearish, and vice versa.

Subramanian’s official current year-end target for the S&P 500 is 1,400.

Here’s a chart from Subramanian’s report:

 

Comments »

Source

Amazon.com, Inc. (NASDAQ: AMZN) Raised to Buy at BofA/ML.

Brookfield Infrastructure Partners L.P. (NYSE: BIP) Cut to Neutral at BofA/ML.

Exelis, Inc. (NYSE: XLS) Cut to Neutral at JPMorgan.

General Motors Company (NYSE: GM) Started as Overweight at Morgan Stanley.

Groupon, Inc. (NASDAQ: GRPN) Cut to Neutral with $20 target at BofA/ML; Cut to Sell at Stifel Nicolaus.

IntercontinentalExchange, Inc. (NYSE: ICE) named as Bull of the Day at Zacks.

Linear Technology Corporation (NASDAQ: LLTC) Cut to Neutral at UBS.

PAREXEL International Corporation (NASDAQ: PRXL) Cut to Neutral at Stern Agee.

Parker Drilling Company (NYSE: PKD) named as Value stock of the day at Zacks.

PVH Corporation (NYSE: PVH) Raised to Outperform at Credit Suisse.

Rangold Resources Limited (NASDAQ: GOLD) Cut to Neutral at Nomura.

Rio Tinto PLC (NYSE: RIO) Raised to Overweight at Barclays.

Southwest Airlines Co. (NYSE: LUV) named as Bear of the Day at Zacks.

The Sherwin-Williams Company (NYSE: SHW) Cut to Neutral at BofA/ML.

Texas Instruments Inc. (NASDAQ: TXN) Cut to Neutral at UBS.

 

Comments »

“A string of weak economic data has brought back talks of a Chinese hard landing.

But in a new note to clients Ting Lu, China economist for Bank of America-Merrill Lynch says “China might be bottoming out from the unlucky Jan-Feb”.

Lu the #1 China economist according to Bloomberg says in the first two months, the Chinese economy was hit by weaker external demand, its coldest winter in 27 years, political tensions that distracted from the economy, and destocking by manufacturers following declining home sales in the last quarter of 2011.  But he thinks the worst may bet over:

“The inevitable fight for political succession was finished ahead of schedule. The situation is turned for the better, and the leadership change will be even smoother, we believe. Top leaders, both outgoing and incoming, will refocus on delivering stable growth. Winter is gone finally; banks are cutting their exorbitant lending rates; new home sales rebounded as mortgage rates for first home buyers were slashed; daily steel output reached new record high as destocking is close to its end. Last but not the least, with the 2nd round LTRO, at least there is no imminent risk of another global financial crisis, in our view.”

While others like Morgan Stanley’s Joachim Fels have revised up their GDP forecasts to 9 percent for 2012, Lu maintains his annual forecast for 8.6 percent because he doesn’t expect Beijing to “overly stimulate the economy”. He argues that China already is a major consumer of big commodities and faster growth will only raise the costs of raw material imports and consequently inflation.

Going forward Lu sees some positive data coming out of China….”

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Source

Best Buy Co. Inc. (NYSE: BBY) Maintained Hold at Argus.

Buffalo Wild Wings Inc. (NASDAQ: BWLD) Started as Equal-Weight at Morgan Stanley.

Crane Company (NYSE: CR) named as Value stock of the day at Zacks.

EMC Inc. (NYSE: EMC) Reiterated Buy and Raised target to $36 at Argus.

Exterran Partners L.P. (NYSE: EXLP) Started as Neutral with $23 target at Credit Suisse.

Gap Inc. (NYSE: GPS) Raised to Buy at Janney.

ICICI Bank Ltd. (NYSE: IBN) named Bull of the Day at Zacks.

InvenSense, Inc. (NASDAQ: INVN) Cut to Perform at Oppenheimer; Started as Equal-weight at Morgan Stanley.

Lululemon Athletica Inc. (NASDAQ: LULU) Started as Buy at UBS.

Micron Technology Inc. (NASDAQ: MU) Reiterated Buy with $11 target at Jefferies.

Pan American Silver Corporation (NASDAQ: PAAS) Started as Buy at Deutsche Bank.

Peabody Energy Corporation (NYSE: BTU) named Bear of the Day at Zacks.

Raytheon Co. (NYSE: RTN) Cut to Sector Perform at RBC.

Research in Motion Ltd. (NASDAQ: RIMM) Maintained Underperform with $12 target at Jefferies.

VIVUS Inc. (NASDAQ: VVUS) Raised to Buy at Brean Murray.

 

Comments »

Full report

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Source

Alcatel-Lucent S.A. (NYSE: ALU) Maintained Sell with $2.00 target at S&P.

Amazon.com, Inc. (NASDAQ: AMZN) Started as Buy at ThinkEquity.

Apollo Group Inc. (NASDAQ: APOL) Cut to Hold at Argus.

ArcelorMittal (NYSE: MT) Raised to Neutral at BNP Paribas.

AT&T Inc. (NYSE: T) Cut to Neutral at Baird.

Cypress Semiconductor Corporation (NASDAQ: CY) Raised to Buy at Lazard (late Wednesday call).

Delek US Holdings Inc. (NYSE: DK) Raised to Outperform at Credit Suisse; named as value stock of the day at Zacks.

eBay Inc. (NASDAQ: EBAY) Started as Buy at ThinkEquity.

Express Scripts Inc. (NASDAQ: ESRX) Reiterated Buy and raised target from $65 to $67 at BofA/ML.

Google Inc. (NASDAQ: GOOG) Started as Buy at ThinkEquity.

HollyFrontier Corporation (NYSE: HFC) Cut to Neutral at Credit Suisse.

Janus Capital Group, Inc. (NYSE: JNS) Cut to Hold at Jefferies.

Las Vegas Sands (NYSE: LVS) Reiterated Buy and raised target from $60 to $65 at BofA/ML.

Logitech International (NASDAQ: LOGI) named Bear of the Day at Zacks.

Nordstrom Inc. (NYSE: JWN) Raised to Buy at Goldman Sachs.

Potash Corp. of Saskatchewan (NYSE: POT) Started as Buy at Stifel Nicolaus.

Verizon Communications Inc. (NYSE: VZ) Cut to Neutral at Baird.

The Washington Post Co. (NYSE: WPO) named Bull of the Day at Zacks.

Whole Foods Market, Inc. (NASDAQ: WFM) Cut to Neutral at Goldman Sachs.

Yahoo! Inc. (NASDAQ: YHOO) Started as Hold at ThinkEquity.

Comments »

Wouldn’t that be something….

Comments »