SUNPOWER CORP. (SPWR)
Merrill Lynch upgrades to buy from neutral
Analyst Mark Heller says that recent deals with PG&E (PCG) unit Pacific Gas & Electric and FPL Group (FPL) suggest SunPower is making significant inroads into the U.S. utility market, which further boosts his confidence in his estimates. He also thinks SunPower's sales channels and geographic diversification place it at a competitive advantage relative to other c-Si PV (photovoltaic) vendors. Heller says SunPower announced one of the largest single utility scale contracts in history; it will install 250MW of PV solar at a California plant using its tracking system technology. Heller says that while pricing details were not disclosed, the contract could be worth $1 billion to $1.5 billion. He has a $100 price target on the shares, which implies a 2009 non-GAAP EPS multiple of 36x.
KOHL'S CORP. (KSS)
Citigroup raises estimates
Analyst Deborah Weinswig says Kohl's second-quarter EPS of 77 cents were well above her estimate and the Street consensus. She says she continues to be impressed by the company's ability to report better-than-expected gross margin expansion in this environment. Weinswig notes the company expects sales to increase sequentially throughout the second half of fiscal 2009 (Jan.), and raised its fiscal 2009 EPS guidance. She expects the company's prudent inventory management to continue to lead to relative EPS and stock outperformance. The analyst raised her $2.98 fiscal 2009 EPS estimate to $3.07, and her fiscal 2010 forecast of $3.15 to $3.16. She rates the shares buy.
AUTODESK, INC. (ADSK)
Needham upgrades to buy from hold
Analyst Richard Davis says Autodesk reported upside second-quarter with total revenues of $619.5 million and non-GAAP EPS of 56 cents vs. his estimates of $605 million and 51 cents, respectively. Davis says he acknowledges concerns about a decelerating world economy, but believes these issues are priced into the stock at 11x his calendar 2009 EPS estimate (excluding cash) for a company that looks set to organically grow revenues 12% and EPS by 13%-15%. He notes he was optimistic about the second quarter, but uncertain about how the U.S. and Europe would report; both executed and look set to continue to grow faster than he expected. The analyst raised his $2.21 fiscal 2009 (Jan.) pro forma EPS estimate to $2.28, and sees $2.66 fiscal 2010 EPS. He set a $45 price target.
HARMAN INTERNATIONAL INDUSTRIES (HAR)
Baird downgrades to neutral from outperform
Harman posted disappointing fourth quarter results. Analyst David Leiker says that upside from new business, currency and production was modestly offset by a shortfall at the company's Consumer division. Also, he notes automotive contribution margin was very disappointing. Looking forward, Leiker sees risks to revenue growth emerging with slowing European demand and the strengthening dollar. He says expected cost cutting actions are not well defined in terms of what is planned and the level of cost incurred. On top of this, Leiker says end markets are weakening, sequential profitability is likely flat for several quarters, and cost savings too far on the horizon. He cut his price target to $38 from $55. The analyst expects the stock to remain in the mid-$30s over the next 12 months.