Thursday, May 21, 2009

Analyst actions 05/21/09

Chicago Bridge & Iron(CBI) upgraded at Stifel - sees 80% upside.

from briefing:
"Stifel Nicolaus upgrades CBI to Buy from Hold and sets target price at $20 saying they expect a lot of raised eyebrows, but their view is that the "turn-around" stories in E&C, which are CBI and Foster Wheeler (FWLT) have led off the bottom, while the "Blue Chip" E&C firms they rate hold, which are Fluor (FLR) and Jacobs (JEC) have been near market performers off the lows. The firm says their view is that of all the speculative blunders, there are few greater than trying to average a losing game; always deemphasize what shows you a relative price loss and keep what shows you a relative profit. Their cash flow analysis projects that CBI can end 2009 with $90 mln in cash after only a $124 mln revolver draw. Profitable execution of backlog in 2009 and more awards for 2010 are key, but they say their analysis also projects further oil price gains as the U.S. dollar declines, which usually lifts orders."

AlphaNinja - The consensus earnings estimates for 2009/10 get CBI to free cash flow in the $150million neighborhood, which is 15%(ish) of what you could buy the company for. If the company eventually returns to their previous % level of gross margin, earnings could explode. Adding CBI to our watch list here.


Safeway (SWY) upped to buy at Credit Suisse. From Barrons:
Love Supermarkets When The Haters Rule
Posted by Bob O'Brien
The time to buy stocks of supermarkets is when the consensus among investors is to avoid them the way you would dented cans and half-priced products in the seafood department.
That would be now.
As we pointed out earlier this week on investors have fallen out of love with shares of Safeway
(SWY) (see our take). Shares trade at trough multiples - about 9 times earnings - and have sold off even more aggressively than the rest of the group.
Credit Suisse took its outlook on the stock higher Thursday, boosting the rating on Safeway to outperform, and taking its rating on Kroger
(KR)higher, as well. Both have responded affirmatively, trading up 2% and 3% higher on the session, respectively.
Still, the gains haven’t done much to erase the selloff that’s taken place this year. Each has declined about 18% year-to-date.
Investors fretted about the slowing consumer spending and the worry about disinflation. Credit Suisse said it understood the worries: discretionary spending, even at the supermarket, is a legitimate concern. Disinflation may be overstated, it said. Either way, problems are well understood, baked into the stock, and could pass later this year. It said it didn’t think sales comps are going to decline as much as management of Kroger suggested. Either way, the issues are cyclical, not structural.

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