With the Dow (NYSE:DIA) at new highs above 12,400, here’s a closer look at investment banking analysts’ latest stock notes today:
GENERAL MOTORS (NYSE:GM):
- DEUTSCHE BANK (NYSE:DB): Delphi deal is good. We believe that the Delphi announcement has significant positive short term consequences for GM’s valuation.
- CITI (NYSE:C): Delphi stake sale is slight positive. The sale will result in a $1.6 billion Q1 book gain. The sale is consistent with GM’s strategy to divest non-core assets and simplify/strengthen its balance sheet. Importantly, the Delphi stake simplifies GM’s asset base by removing one component out of a multi-layered sum-of-the-parts valuation that some investors have come to view as complex.
- DEUTSCHE BANK (NYSE:DB): Disappointing study results. We are downgrading Omeros shares to hold following the announcement of negative Ph 3 results for the co’s lead product candidate for improving outcomes in arthroscopic surgeries. And despite the disappointing data, we continue to believe in the viability of OMER’s Pharmaco Surgery platform given positive clinical results from trial to date.
GLOBAL PAYMENTS (NYSE:GPN):
- DEUTSCHE BANK (NYSE:DB): Concerned about next year’s margins. Attainability of meaningful margin expansion in FY12 is biggest unknown, as it’s hard for us to see better pricing in UK/cost saves in Philippines overcome G2 delay, competition in Canada, Spain integration and build-out in Brazil.
- BARCLAYS (NYSE:BCS): Easter and Duane Reade acquisition will help sales. We are forecasting total sales of $6.14 billion for March, an increase of 5.5%, which includes the benefit of the Duane Reade acquisition.
OFFICE DEPOT (NYSE:ODP):
- GOLDMAN SACHS (NYSE:GS): Challenges persist. The sector is clearly struggling to cope with secular product cycle challenges, online price competition, and sluggish demand recovery.
- GOLDMAN SACHS (NYSE:GS): Price hikes are not a surprise. We maintain our sell rating, as we see the stock priced for perfection. Industry participants tell us that the price increase followed similar increases taken by Mars, Wrigley and Cadbury earlier in the week.
- GOLDMAN SACHS (NYSE:GS): Attractive story but potential acquisitions keep us neutral. We remain positive on attractive drill ship demand dynamics and view the likely upcoming registration of Ocean Rig shares as a likely positive event. In addition much of the funding overhang on new vessels has been removed given recent capital raises.