With the Dow holding gingerly above 12,000 this morning, here’s a closer look at investment banking analysts’ latest stock notes today:
MetLife, Inc. (NYSE:MET)
- CITI (NYSE:C): We view MET’s position as a benchmark global life insurer; its well capitalized balance sheet; high-quality earnings; superior growth potential from $16B transformational ALICO/AIG deal; as key drivers for valuation expansion over the next 9-12 months, supporting our $59 target (36% ETR). With stock down ~6% in the past month, at 0.9x 4Q11 BV, MET valuation is compelling, in our view.
Adobe Systems (NASDAQ:ADBE)
- DEUTSCHE BANK (NYSE:DB): Japan likely to weigh on outlook. Adobe reports 1Q11 on Tuesday. We expect an inline 1Q11, with our estimates a tad higher than consensus – $1,032m/$0.58 vs. consensus at 1,027m/$0.57… But with Japan accounting for ~15% of revenue, business disruption during March is likely to lead Adobe to guide 2Q modestly below consensus. We tweak estimates down for 2Q and 3Q but reiterate our Buy rating on the company’s ability to execute and attractive valuation relative to the large-cap peer group.
Netflix Inc. (NASDAQ:NFLX)
- CREDIT SUISSE (NYSE:CS): We are upgrading NFLX to Outperform from Neutral and raising our target price to $280 from $180. NFLX shares have retreated about 15% from its all-time high of $247, and our upgrade is based on the following: (1) Headline risk around new competition is more fully reflected in share price levels, (2) We do not expect a material impact on Netflix from Amazon Prime Instant Video based on our proprietary survey, (3) International expansion should boost NFLX addressable market, (4) Valuation is more appealing at current levels.
Nordstrom, Inc. (NYSE:JWN)
- GOLDMAN SACHS (NYSE:GS): Upgrade to Buy. We are upgrading Nordstrom to Buy from Neutral as we see 16% upside based on combination of earnings and multiple expansion: 1) earnings expansion – JWN’s 2011’s guidance of +2-4% SSS and flattish margins appear conservative given better trends as they gain share with a better customer; and 2) multiple expansion – in or view investors have wrongly lumped JWN in with peers that lack compelling growth prospects across stores, outlets and online. With the stock selling at a modest 13.8x, below its 14.3x average, we believe current levels present a compelling risk/reward.
Zions Bancorporation (NASDAQ:ZION)
- CREDIT SUISSE (NYSE:CS): Upgrading ZION to Outperform from Neutral. We expect 1Q11 EPS to beat consensus expectations, driven by a sharp decline in net charge-offs. Estimate TARP repayment in 2H11 with low level of common equity issuance (< 25% of TARP, depending on regulatory credit for prior capital actions). We also forecast above consensus EPS in 2012, driven mainly by balance sheet optimization (preferred stock / sub-debt reductions), and positive loan growth.
Canadian Pacific Railway Limited (NYSE:CP)
- CITI (NYSE:C): Disruptions from unusually severe weather, coupled with the lagged effect of fuel surcharge recovery in an escalating fuel price environment, has resulted in an approximately C$0.40 headwind to 1Q11 EPS YOY. Canadian Pacific now expects 1Q11 EPS to be between C$0.12-0.20 (Citi and consensus C$0.78). Reducing EPS estimates as a result of our expectations for higher fuel expenses and price target to $71 on maintained target multiple of 16x our blended 2011/2012 EPS estimate. We include a portion of ‘12 EPS in order to capture some of CP’s normalized earnings power