Bank Analysts Just Issued New Grades on 6 Stocks April 8th

With the Dow (NYSE:DIA) a tad higher this morning at 12,419 and the S&P (NYSE:SPY) at 1335, here’s a closer look at investment banking analysts’ latest stock notes today:


  • 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.



  • 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.


  • 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.


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