Thursday, June 24, 2010

Stock Picks: DirecTV, Intel, Microsoft, Sonic

DirecTV: Wunderlich Securities equity analyst Matthew Harrigan maintained a buy rating and $46 price target on shares of DirecTV (DTV) on June 22.
In a brief note, Harrigan said the largest U.S. satellite TV provider "still commands [a) halo with consumers."
Following three years of "relative quiescence" for new product introductions, DirecTV will benefit from multiroom viewing capability of new equipment, the introduction of 3D channels, the growth of DirecTV Cinema, and the launch of a networked home media center.
The analyst said competitor DISH Network's (DISH) "Free HD for Life" promotion "will emerge as only short-term noise."
Intel: Standard & Poor's equity analyst Clyde Montevirgen kept a buy rating on shares of Intel (INTC) on June 22.
On June 21, Intel and the U.S. Federal Trade Commission filed a motion to suspend trial proceedings while the two work on a potential settlement of the government's antitrust case against the chipmaker.
Under the motion, the two parties would have until July 22 to discuss an agreement, the Santa Clara [Calif.) company said in a statement.
The FTC sued Intel in December, accusing it of illegally using its dominant market position for a decade to "stifle competition and strengthen its monopoly." The suit was filed after Intel settled a civil case with rival Advanced Micro Devices (AMD) and was fined by the European Union.
"Although we are somewhat concerned about potential financial implications, and watching out for other cases against INTC, we believe that a settlement will help to reduce the overhang caused by legal matters," Montevirgen wrote in a posting on the S&P MarketScope service. "We continue to think the shares are undervalued."
Microsoft: Soleil Securities maintained a buy rating and $34 price target on shares of Microsoft (MSFT), the world's biggest software maker, on June 22.
"We believe that the PC demand environment is improving significantly, which positions Microsoft to have a very solid fiscal fourth quarter [ending June 30)," wrote equity analyst Neil Herman in a note. He said that recent comments from Acer, Dell (DELL), and Hewlett-Packard (HPQ) support his view that PC demand trends are "quite healthy."
"Particularly with the release of Windows 7.0, Microsoft is helping drive this PC cycle and is positioned to be one of the biggest beneficiaries," Herman wrote.
The analyst estimates that Microsoft's Windows revenue will grow to $4.662 billion in the fourth quarter, from $4.415 billion in the third quarter and $3.108 billion in the year-earlier period.
Sonic Corp.: Morgan Keegan equity analyst Robert Derrington kept a market perform rating on shares of Sonic Corp. (SONC), the largest U.S. chain of drive-in restaurants, on June 22.
In a note, Derrington said Sonic's third-quarter earnings per share [EPS) of 18%, posted after the close of trading June 21, missed his estimate of 19%, reflecting lower-than-expected total revenue compounded by worse-than-projected restaurant and operating margins. Derrington said Sonic's system sales had improved from March to April but deteriorated again in May.
The analyst said "intense" industry competition, high unemployment, and volatile commodity prices "continue to frustrate" management's efforts at stabilizing Sonic's operating trends. He lowered his fiscal 2010 [ending August) EPS estimate to 50% from 51%. He maintained a fiscal 2011 EPS estimate of 62%.

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