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Analyst upgrades: AEO, CVS, ODP, WPPGY and PXLW

Posted Sep 26th 2007 10:48AM by Eric Buscemi (RSS feed)
Filed under: Analyst Reports, Analyst Upgrades and Downgrades, CIT Group (CIT), CVS Corp (CVS), Office Depot (ODP)

MOST NOTEWORTHY: American Eagle, CVS/Caremark, Office Depot, WPP Group and Pixelworks were today's noteworthy upgrades:

American Eagle Outfitters Inc (NYSE: AEO) was upgraded to Outperform from Market Perform at Wachovia, as the firm believes momentum from a strong Spring/Summer can carry into the fall/Holiday seasons.
JP Morgan views CVS/Caremark Corporation (NYSE: CVS) as the most sophisticated healthcare offering, the largest PBM, and has first mover advantage. The firm upgraded shares to Overweight from Neutral.
JP Morgan also upgraded shares of Office Depot Inc (NYSE: ODP) to Overweight from Neutral based on valuation and potential turnaround.
Morgan Stanley upgraded WPP Group (NASDAQ: WPPGY) to Overweight from Equal Weight as they believe the company can still meet its profit forecasts and margin goals in a slowing global economy.
Jefferies upgraded shares of Pixelworks Inc (NASDAQ: PXLW) to Hold from Underperform on valuation as they no longer believe the risk/reward favors shorting at these levels.

OTHER UPGRADES:

Stifel upgraded Tempur Pedic International (NYSE: TPX) to Buy from Hold.
Merrill upgraded Tyco Electronics (NYSE: TEL) to Buy from Neutral.
BB&T upgraded Celanese Corporation (NYSE: CE) to Buy from Hold.
CIT Group Inc (NYSE: CIT) was upgraded to Outperform from Neutral at Credit Suisse.

Option update: Financial sector volatility increases on credit quality

Posted Aug 3rd 2007 5:50PM by Paul Foster (RSS feed)
Filed under: CIT Group (CIT), Options

Sovereign (NYSE: SOV) - September volatility Elevated at 55; above 26-week average of 28. SOV, a $90 billion financial institution with nearly 800 community banking offices, is recently down $1.20 to $17.47. SOV September option implied volatility of 55 is above its 26-week average of 28 according to Track Data, suggesting larger price risks.

CIT Group (NYSE: CIT) - September volatility of 65 above 26-week average of 29. CIT, a commercial & consumer finance company, is recently down $1.78 to $36.77. CIT September option implied volatility is at 65; above its 26-week average of 28 according to Track Data, suggesting larger risk.

Genworth Financial (NYSE: GNW) - September volatility of 38 above 26-week average of 26. GNW is a financial security company meeting the retirement, longevity and lifestyle protection, investment and mortgage insurance needs of 15 million customers. GNW is recently down .97 to $29.01. GNW September option implied volatility of 38 is above its 26-week average of 26 according to Track Data, suggesting larger risk.

Volatility Index S&P 500 Options-VIX up 4.11 to 25.33.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Breaking Down GE's Commercial Finance Business: A BloggingStocks series

Posted Jul 30th 2007 10:45AM by Peter Cohan (RSS feed)
Filed under: Earnings Reports, Forecasts, Products and Services, General Electric (GE), Define Investing, Citigroup Inc. (C), JPMorgan Chase (JPM), CIT Group (CIT)

I estimate that General Electric Company's (NYSE: GE) Commercial Finance segment is worth between $43.5 billion and $64.1 billion.

GE's Commercial Finance segment, which constituted 14.6%, 14.0%, and 14.5% of GE's consolidated revenues in 2006, 2005, and 2004, respectively, offers loans, leases, and other financial services to manufacturers, distributors, and end-users for a variety of equipment and major capital assets. These assets include industrial-related facilities and equipment; commercial and residential real estate; vehicles; corporate aircraft; and equipment used in the construction, manufacturing, telecommunications, and health care industries.

GE Commercial Finance looks to me like it's benefiting from the surge in orders for GE Infrastructure.commercial finance profits were up 18% in the second quarter. While developing countries use GE Commercial Finance to purchase capital equipment, the risk in this business is in lending to commercial and residential real estate which seems far from bottoming out.

Assuming that GE Commercial Finance generates net income of $4.5 billion in 2007, here are the range of valuations based on the Price/Earnings ratios of the following peer companies:

CIT Group Inc. (NYSE: CIT) P/E: 14.3. $64.1 billion
Citigroup Inc. (NYSE: C) P/E: 11. $49.3 billion
JPMorgan Chase & Co. (NYSE: JPM) P/E: 9.7. $43.5 billion

Next: Breaking Down GE Money

Peter Cohan is president of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He owns General Electric shares and has no financial interest in the other securities mentioned in this post.

Newspaper wrap-up 4-18-07: Blackberry service suffers meltdown

Posted Apr 18th 2007 9:15AM by Eric Buscemi (RSS feed)
Filed under: Newspapers, Magazines, Internet, General Electric (GE), Research in Motion (RIMM), Goldman Sachs Group (GS), Verizon Communications (VZ), Jones Apparel Group (JNY), Vonage Holdings (VG), SLM Corp (SLM)

MAJOR PAPERS:

Vonage Holdings Corp (NYSE: VG) said bankruptcy is one of the potential risks from its continuing patent litigation with phone giant Verizon Communications Inc (NYSE: VZ), reported the Wall Street Journal.
Blackstone Group is selling Extended Stay Hotels to Lightstone Group for $8B, which beat offers from Fortress Investment Group (NYSE: FIG) and Goldman Sachs Group Inc (NYSE: GS), according to the Wall Street Journal.
The Wall Street Journal reported that other financial firms such as Countrywide Financial Corporation (NYSE: CFC), CIT Group Inc (NYSE: CIT), iStar Financial (NYSE: SFI), and KeyCorp (NYSE: KEY) may be in play after the sale of Sallie Mae (NYSE: SLM).

OTHER PAPERS:

The Telegraph reported that General Electric Company (NYSE: GE) is looking to sell a natural gas power plant in the UK for an estimated GBP450M-GBP500M, with potential buyers including E.ON AG ADS (NYSE: EON) and Scottish Power ADS (NYSE: SPI).
The New York Post has learned that Heather Pech, a senior Jones Apparel Group Inc (NYSE: JNY) executive that headed the Nine West retail chain, has left the company.