Friday, April 1, 2011

Top 3 Analyst Stock Picks: Undervalued Stocks, Upcoming Catalysts and More



Rudolph Technologies Inc. (NASDAQ: RTEC), Companhia Brasileira de Distrib. (NYSE: CBD) and CIGNA Corporation (NYSE: CI) are three top analyst stock picks made during today’s session.
Rudolph Technologies Gets $17/Share Price Target
Rudolph Technologies Inc. (RTEC, Free Analysis), a developer of software systems for semiconductor manufacturers, was initiated with a Buy rating and a $17.00 per share price target by DA Davidson ahead of the opening bell. At a significant 54% premium to the current marketprice, the analyst’s recommendation represents a very bullish outlook on the company’s outlook.
In early March, the software developer was also favorably mentioned by Stifel Nicolaus analysts, who believe that it has a number of short-term and long-term catalysts, after meeting with the company’s CFO. The analyst maintains a Buy rating and a $14.00 per share price  target on the name.
Companhia Brasileira de Distrib. Upgraded to Strong Buy
Companhia Brasileira de Distrib. (CBD, Free Analysis), a Brazil-based food retailer that also has a retail segment, was upgraded to a Strong Buy from an Outperform by Raymond James ahead of the opening bell. Notably, today is also the ex-dividend date for the stock, which has led to significant volume over the past few sessions, as investors get in for the 0.95% distribution.
While the food retailer trades with a price-earnings multiple of around 33.8x its trailing EPS, it has experienced significant 48.2% quarterly growth year-over-year. However, investors may want to take note of the firm’s significant levels of debt, which yield a relatively high debt-to-equity ratio of 87x, with more than $5 billion in long-term debt recorded on its books.
CIGNA is Undervalued by 15-70% based on Sum-of-Parts
CIGNA Corporation (CI, Free Analysis), a global health service organization with numerous subsidiaries around the world, may be undervalued by between 15% and 70% on a sum-of-parts basis, according to Deutsche Bank. The analyst raised its price target and finds the risk/reward ratio to be very attractive at current levels after conducting a sum-of-parts analysis on the stock.
The U.S. health insurance sector has also begun to improve after experiencing a sharp decline last year amid government-related uncertainty. However, the Financial Times now suggests that the outlook for big insurers has brightened, as rising profits, dividends and stock prices indicate that there is little to worry about from the passage of the healthcare bill.

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