- GOLDMAN SACHS (NYSE:GS): TripAdvisor spin off is profitable but has some risks. We forecast Trip generating 2012 revenue of around $725 million. We see Trip growing revenue and earnings in the high-teens range for the next two years, helped by secular trends but hurt by disruption from Google Places.
- DEUTSCHE BANK (NYSE:DB): Potential value creation with this move. The proposed spin-off is expected to be completed in the third quarter of 2011.
WALT DISNEY COMPANY (NYSE:DIS):
- DEUTSCHE BANK (NYSE:DB): Buy. Disney has favorable dynamics such as 63% of EBIT from cable networks, limited secular growth concerns, very strong competitive positions, leading global brands, strategically complete and an excellent balance sheet and governance. 5 Insiders Just Sold Shares in This Global Entertainment Company>>
WENDY’S/ARBY’S GROUP (NYSE:WEN):
- GOLDMAN SACHS (NYSE:GS): Same-store sales may be soft, beef costs squeeze margins. Beef costs have soared. the cost of beef, WEN’s largest input at about 20% of food costs, has increased substantially in recent weeks. Our checks suggest WEN’s beef costs from its purchasing co-op re-priced 25% higher in April. Breakfast is also unprofitable and WEN is putting a significant amount of resource into launching breakfast across ts system.
THE GAP (NYSE:GPS):
- WELLS FARGO (NYSE:WFC): Promising outlook. Over the past several years, GPS has done an impressive job growing operating margins to 5-year highs despite negative comps through merchandise margin improvement and lower SG&A. The company is now focused on growing sales productivity, which has declined by 25% over the past 5 years. Increased sourcing costs next year could pressure merchandise margins. However, occupancy leverage from square footing reduction should offset some of that.
- MORGAN STANLEY (NYSE:MS): Outlook impacted by future investments. While we are pleased to see this capex budget ramp into more remodels and the company is having success building a loyalty program. This will hurt adjusted EBITDA and FCF in the near-term, which could keep a valuation lift on RAD shares.
CBS CORP. (NYSE:CBS):
- DEUTSCHE BANK (NYSE:DB): Undervalued. We expect the street is too low relative to the potential for the CBS network to see 12% upfront CPM gains, strong cost control, fast international syndication growth, and reverse retrans potential. MUST READ: Are We Entering the Golden Era of Media?>>