24/7 Wall St. » JBLU

Is There an Airline Stock with Upside Potential? (AMR, DAL, UAL, LUV, LCC, JBLU, ALK, HA, SAVE)

Paul Ausick — Thu, 08 Dec 2011 19:04:53 +0000

The recent bankruptcy filing by AMR Corp. (NYSE: AMR), parent of American Airlines, has put a damper on any enthusiasm there might have been among investors for US airlines stocks. A report yesterday from the International Air Transport Association (IATA) added to the negativity, noting that total profits could be halved in 2012.

With American Airlines on the sidelines, we’ve looked at the stocks of several other US carriers in a search for some hidden value: Delta Air Lines Inc. (NYSE: DAL), United Continental Holdings Inc. (NYSE: UAL), Southwest Airlines Co. (NYSE: LUV), US Airways Group Inc. (NYSE: LCC), JetBlue Airways Corp. (NYSE: LCC), Alaska Air Group Inc. (NYSE: ALK), Hawaiian Holdings Inc. (NASDAQ: HA), and Spirit Airlines Inc. (NASDAQ: SAVE).

Delta Air Lines has a median target price of $18.00 and is trading at $8.39 around noon today. The implied gain here is about 115%. Delta’s share price is about -1.5% lower than it was on October 21st, so the implied gain is growing because the share price is falling. The target price is unchanged since October.

US Airways has a median target price of $10.00 and is trading today at $5.36, about -7.6% lower than the share price in late October. The implied gain is about 86.6%, and the target price is unchanged since October.

United Airlines has a median target price of $32.50 and is trading today at $19.94, yielding a potential upside of nearly 63%. The stock’s target price rose by $0.50 in the past six weeks, but the share price has fallen by about -1.4% in the same period.

Every one of the nine stocks we looked at has an implied gain of greater than 20%, proving once again that numbers often don’t tell the whole story. The only stock with a chance of offering investors some value is Alaska Air. But the chance is a very slim one.

Alaska Air’s median target price was raised from $80.00 to $83.00, and the share price has increased by about 5% since late October. It’s the only one of these nine to perform that combined feat. The stock’s potential upside is 22% and its forward P/E is 7.39. The company does not pay a dividend.

Alaska has ordered 15 new 737s from Boeing Co. (NYSE: BA) and deliveries are scheduled to begin in 2012. Thirteen of the new planes will be 737-900ERs, which carry a list price of $89.6 million each. That’s a total of about $1.2 billion, which is roughly equal to both the company’s long-term debt and to its available cash.

The company does not indicate how it will finance the purchase of these planes, but a recent report in the Financial Times indicates that European banks, the main lenders to global airlines, have cut back lending for commercial aircraft purchases. That means the airlines will have to issue debt or perhaps resort to leasing new planes.

The impact on aircraft makers like Boeing is likely to be greater than the impact on airlines, but what’s reasonably certain is that the cost of capital for aircraft is going to rise. For that reason, if for no other, investing in any airline stock now is a speculative play rather than a value play.

Paul Ausick

Filed under: Airlines, Analyst Calls, Bankruptcy, Transports Tagged: ALK, AMR, DAL, HA, JBLU, LCC, LUV, SAVE, UAL

AMR Bankruptcy, A Real Boon For Airlines (AMR, UAL, LCC, LUV, DAL, JBLU)

Administrator — Tue, 29 Nov 2011 15:51:18 +0000

The news flow around the AMR Corporation (NYSE: AMR) filing for bankruptcy is rampant. Some say it was expected and others believe it was premature. The aim to work its cost structure, but this action will kill the common shareholders.

It may seem odd, but the AMR bankruptcy is likely a boom for the likes of United Continental Holdings, Inc. (NYSE: UAL) and US Airways Group, Inc. (NYSE: LCC), which are up 6% and 10% respectively. Southwest Airlines Co. (NYSE: LUV) is up 0nly 1 penny at $7.88 and Delta Air Lines Inc. (NYSE: DAL) is up 3.6% at $7.70. Even JetBlue Airways Corporation (NASDAQ: JBLU) is catching a 5.7% pop higher.

All those bankruptcy rumors now turned out to be true. AMR has noted that it has $4.1 billion cash in the bank and also that it will honor all tickets and reservations for American and American Eagle Flights.

The market is telling you that shareholders will be left with nothing here. AMR’s stock is down 85% at $0.2311 and the new 52-week trading range is $0.80 to $8.89.

Gerard Arpey has also announced his decision to retire as Chairman and Chief Executive Officer. I wonder what his parachute has considering that this wipes out shareholders.

This move will allow other airlines to have a stronger negotiating position, it will also allow for potentially higher ticket prices, and more nickel-and-dime fees. If this wasn’t true you wouldn’t have the peers up as much as 10%.

Early this morning in the pre-market AMR’s stock was down about 60%. For it to slide further is a sing of doom heading the way of AMR. A bankruptcy stock down 60% indicated at least some chance of there being assets left over. A drop of almost 86% is a sign of a death sentence.

JON C. OGG

Filed under: Airlines, Bankruptcy, Corporate Governance, Economy, Law, Management Change, Transports Tagged: AMR, DAL, JBLU, LCC, LUV, UAL

Southwest, Oversold & Poised For Recovery Against Legacy Carriers (LUV, UAL, LCC, DAL, AMR, JBLU)

Administrator — Tue, 22 Nov 2011 13:20:23 +0000

Southwest Airlines Co. (NYSE: LUV) is now sometimes considered a discount carrier and sometimes considered a legacy carrier, but it still has among the most loyal customer base and it seems to be the most likely to remain profitable in good times and bad. The recent market turmoil has created a situation where Southwest shares have sold off too much. Perhaps way too much. Does that mean shares cannot slide further? No, but the current price is getting to be where the risk-reward parameters are more and more in the favor of long-term investors.

Another airline that is also cheap and oversold is United Continental Holdings, Inc. (NYSE: UAL), but it is expected to only have breakeven earnings in the March quarter while Southwest is expected to be profitable in the current December and the coming March quarters. Companies like US Airways Group, Inc. (NYSE: LCC) and Delta Air Lines Inc. (NYSE: DAL) are both expected to have an operating loss in at least one of the next two quarterly reports. The rumor mill also has many investors worried of a potential bankruptcy at AMR Corporation (NYSE: AMR). JetBlue Airways Corporation (NASDAQ: JBLU) is attractive on valuations as well, but its problems seem to keep working against it even if its Northeast-dominance leaves it more subject to adverse weather conditions than most rivals. This leaves Southwest as the best of class among the large air carriers even if these other stocks also look oversold on their charts.

Southwest remains the most passenger-friendly large air carrier in the sky. The company is also still digesting the acquisition of Airtran and it is now much more subject to the price of jet fuel that it was from 2006 to 2008. Shares sold off from $12 to $8 during the summer sell-off and shares went well under $8 during the peak selling in late-September and early October. After a recover, shares slid from $8.50 just about two weeks ago to end up at $7.73 most recently.

The airline still sports a relatively young fleet and it still has perhaps the best safety record despite some less than headline-friendly in the last few years. The company pays only a 0.2% dividend yield, but that is actually one of the few dividends in the airline sector. With what may be more predictable earnings than peers, we view Southwest as the one airline that wants to be dividend-friendly in the years ahead.

We would consider the current $12.21 consensus analyst target from Thomson Reuters now artificially high even if the 52-week trading range is $7.15 to $13.77 versus a $7.73 price today. In fact, that target price is high enough that we are even considering that analysts will lower their price targets ahead. The stock is now trading under its stated book value and it trades at only about 1.1-times tangible book value. And if it meets Thomson Reuters estimates, then the stock trades at 19-times 2011 and under 10-times 2012 expected earnings. Southwest should recover considerably unless the market tanks or unless an unforseen event occurs.

We would note, Southwest has what is close to a net-zero exposure to Europe. The only thing not in its favor is that hedging gasoline prices like it did in years past has been far less prevalent. The company also has a better labor situation compared to other airlines.

This was one of seven oversold picks poised for a comeback which was offered recently to our readers who sign up for our free daily newsletter service. Each morning’s free newsletter is sent by email and includes the top news headlines, shows the top 15 or so analyst upgrades and downgrades, covers activist investor and insider trading, and offer key trading alerts for investors. Sign up in the box below.

JON C. OGG

Filed under: Airlines, Transports, Value Investing Tagged: AMR, DAL, JBLU, LCC, LUV, UAL

Third Quarter 2011 Selected Financial/Operational Metrics For Major US Airlines

247wallst — Mon, 31 Oct 2011 08:09:25 +0000

Comments as noted:

Net profit/loss

UAL = $773M

DAL = $765M

ALK = $131M

LUV = $122M

LCC = $ 95M

JBLU = $ 38M

AMR = -($162M)

While most of the carriers have recently been reporting consistent quarterly profits, AMR continues their losing streak.

Operating income (more important to look at than net)

UAL = $1,055M

DAL = $1,030M

LUV = $ 247M

LCC = $ 193M

ALK = $ 145M

JBLU = $ 108M

AMR = $ 39M

Both United and Delta have begun taking advantage of their merger related synergies and now have significant -air fare- pricing power that is inherent with the industry consolidation.

Operating “margin”

ALK = 12.1%

DAL = 10.5%

UAL = 10.4%

JBLU = 9.0%

LUV = 5.7%

LCC = 5.6%

AMR = .6%

After accounting for the size of each carrier, Alaska continues to outperform the industry in margins.

Total (absolute) revenue (in millions)

UAL = $10,171

DAL = $ 9,816

AMR = $ 6,376

LUV = $ 4,311

LCC = $ 3,436

ALK = $ 1,198

JBLU = $ 1,195

United and Delta, due to their mergers with Continental and Northwest, have become the big gorillas of the industry. Combined revenues from just United and Continental now total more than the rest of the entire US airline industry (passenger airlines). United’s revenue alone is more than the total of Southwest, US Airways, Alaska, and JetBlue.

Regional/affiliate ratio of total passenger revenue

LCC = 26.0%

DAL = 20.0%

UAL = 19.7%

ALK = 19.4%

AMR = 13.2%

Excluding American, the large network carriers have grown their regional/affiliate networks thereby providing significant O&D revenue and passenger feed to mainline operations.

EBITDAR margin

ALK = 24.1%

JBLU = 16.7%

UAL = 16.0%

DAL = 15.3%

LCC = 12.2%

LUV = 8.4%

AMR = 7.4%

After excluding interest, taxes, depreciation/amortization, and aircraft rents, Alaska is by far, the financially strongest carrier with American being the weakest.

Wage benefit ratio of operating revenue / operating expense (mainline operations)

JBLU = 19.7% / 21.7%

DAL = 21.2% / 24.9%

LCC = 21.9% / 23.6%

UAL = 24.1% / 26.1%

LUV = 26.6% / 28.2%

ALK = 26.8% / 33.2%

AMR = 31.5% / 32.1%

Since 2007 and the upsurge in fuel costs going from approximately 10% of each airline’s operating costs to 30+%, labor has paid the price as most airline labor groups took huge concessions after 911.

Overall labor cost ratio differentials for the airline industry are largely affected by labor contract productivity work rules more so than (current) hourly pay rates.

Pilots from United, Delta, American, and US Airways are currently in contract negotiations and now earn approximately what they were back in the mid 1990′s and -unadjusted– for inflation.

Unit labor costs (wage & benefits cents per mile)(mainline operations)

JBLU = 2.39

LCC = 3.03

DAL = 3.12

LUV = 3.44

UAL = 3.49

ALK = 3.81

AMR = 4.03

While each airline has a unique operation from their competitors, the unit labor cost differential can but not always, play a large part of the overall profit/loss for each carrier. i.e., JetBlue and Alaska are similar size airlines which have the lowest and second highest unit labor costs but are still both profitable.

American’s labor costs consistently rank as the industry’s most expensive in large part because competing carriers were able to shed labor contract work rules via bankruptcy. While American’s hourly wage rates are more-or-less industry competitive, their work rules drive the industry’s lowest productivity.

Mainline system yield (cents/mile) / load factor

ALK = 14.70 / 87.0%

LUV = 14.69 / 82.0%

UAL = 14.56 / 86.1%

DAL = 14.32 / 86.9%

AMR = 14.21 / 84.9%

LCC = 13.76 / 86.5%

JBLU = 13.04 / 84.5%

Yield driven by high(er) load factors provides a significant indicator for an airline’s revenue performance and competitiveness.

Accepting the above, yield is affected by each airline’s “unique” operation. Fundamentals such as domestic/international, long/short haul, premium seating and global alliances all play a role in “yield” performance.

Data excludes ex/special items- Some data may be estimated

DAL = Delta

UAL = United

AMR = American

LCC = US Airways

LUV = Southwest

ALK = Alaska

JBLU = JetBlue

# # # #

Disclosure- The above opinions and comments should not be used to determine the worth of any stock or investment. At the time of writing, the author and his family did not hold stock and/or derivative positions in any of the airlines covered in this article.

_____________________________________________________________

Robert Herbst is an independent airline industry consultant. He is the founder of AirlineFinancials.com which provides airline industry analysis and commentary for major US carriers. In addition to his consulting work, Mr. Herbst was a commercial airline pilot for over 35 years. His aviation experience and financial background provide a unique analytical perspective into the airline industry.

Filed under: Airlines Tagged: ALK, AMR, DAL, JBLU, LCC, LUV, UAL

Boeing Takes Off, Raises Guidance (BA, EADSY, LUV, ALK, DAL, UAL, LCC, JBLU, FAA)

Paul Ausick — Wed, 26 Oct 2011 14:00:58 +0000

For all its struggles with new airplanes, Boeing Co. (NYSE: BA) put up some pretty big numbers for the third quarter. The company’s EPS of $1.46, sharply above the consensus estimate of $1.12. Revenue came in at $17.73 billion, lower than the consensus estimate of $17.83 billion. Boeing delivered 127 commercial aircraft in the third quarter, up sequentially from 118 and year-over-year from 124.

The company’s first new 787 Dreamliner was delivered and the company’s first new 747-8 cargo plane was delivered to Luxembourg’s Cargolux after an initial spat over pricing. Airbus maker European Aeronautic Defense and Space Co. (OTC: EADSY) releases earnings next month. US airlines Southwest Airlines (NYSE: LUV), and Alaska Air (NYSE: ALK), and Delta Air Lines Inc. (NYSE: DAL) released earnings earlier this week and United Continental Holdings Inc. (NYSE: UAL), US Airways Inc. (NYSE: LCC), will release earnings tomorrow. JetBlue Corp. (NASDAQ: JBLU) missed the consensus EPS estimate this morning, though revenues were in-line with expectations.

Boeing raised its full-year EPS guidance from $3.90-4.10 to $4.30-$4.40 and narrowed its revenue estimate to $68-$70 billion. The company lowered delivery estimates on the Dreamliner to 15-20 and to 25-30 for the 747-8 freighter, while raising margin estimates from 8%-8.5% to 9%-9.5%.

The company’s defense group posted an operating profit jump of 20% year-over-year, with its military aircraft group boosting profit by 27%.

The upbeat results and the improved guidance could be hard to meet given the overall outlook for air carriers for the rest of this year. The weak global economy, especially in the developed countries, is already having an impact on capacity. Several of the large foreign carriers have retrieved mothballed aircraft and put them back into service, threatening to reduce traffic even more.

Boeing could be staring into the teeth of a swift and significant downturn in orders if passenger traffic declines further. The company’s backlog reached $332 billion at quarter end, up from $323 billion sequentially. The company said that it has taken a net $61 billion in new orders in the first nine months of the year.

For all the good news in this report, one unusual item that stands out is cash flow. Boeing’s free cash flow for the quarter was just $69 million on operating cash flow of $449 million. A year ago the company’s operational cash flow totaled $1.86 billion and free cash flow totaled $1.6 billion. For the year-to-date, free cash flow is negative, at -$50 million compared with a positive free cash flow of $1.1 billion for the first nine months of 2010. Boeing attributes the decline to continued investment in its development programs and a $500 million payment to its discretionary pension fund.

Boeing’s shares are trading up more than 5% shortly after opening this morning, at $67.11, in a 52-week range of $56.01-$80.65. The lightly traded Guggenheim Airline ETF (NYSE: FAA) closed at $27.89 yesterday and has seen no trades yet this morning.

Paul Ausick

Filed under: Airlines, Earnings, Transports Tagged: ALK, BA, DAL, EADSY, FAA, JBLU, LCC, LUV, UAL

Significant Price Gains Expected For Airlines Stocks (AMR, DAL, UAL, LUV, LCC, JBLU, ALK, HA, SAVE)

Paul Ausick — Fri, 21 Oct 2011 17:38:53 +0000

The airlines industry is in a very bad way, unless you are a Wall Street analyst making upside predictions for a sector that Warren Buffett hates. High fuel costs and fewer passengers are simply putting too much weight on revenue and profit. If it weren’t for fees for everything from checked bags to earphones, the airlines would be in even worse shape. The carriers have also boosted fares, which has helped staunch the red ink.Overall profits are expected to remain weak through the fourth quarter, even though another fare hike is on the horizon for the travel-heavy holiday season. The weakness will also carry over to those airlines with freight businesses. Cargo traffic is expected to remain soft due to the weak global economic outlook.

There appear to be some value plays in the industry right now, but whether that is true or whether we’re looking at value traps depends to forces beyond the industry’s control. Fuel costs and the overall US and global economies being the most critical.

All data from Yahoo! Finance and MarketWatch and current stock prices were gather just before noon today.

AMR Corp. (NYSE: AMR), parent of American Airlines, has a median target price of $4.75 from 10 brokers. Shortly before noon today, shares are trading today at $2.77, for an implied gain of $1.98, or 71%. AMR’s forward P/E is negative and the company does not pay a dividend. The stock’s 52-week trading range is $2.73-$8.98, and at today’s price that’s about 1.5% above its 52-week low, posted earlier this morning, and 69% below the 52-week high. AMR reported a loss of $162 million for the third quarter, mainly due to a 40% rise in fuel costs that more than wiped out fare and fee increases. Rumors of a Chapter 11 bankruptcy filing have also hit AMR’s share price hard.

Delta Air Lines Inc. (NYSE: DAL) has a median target price of $14 from 13 brokers. Shortly before noon today, shares are trading today at $8.52, for an implied gain of $5.48, or 64%. Delta’s forward P/E is 4.15 and the company does not pay a dividend. The stock’s 52-week trading range is $6.41-$14.54, and at today’s price that’s about 33% above its 52-week low, posted earlier this morning, and 41% below the 52-week high. Delta reports earnings next week, and the consensus estimate is EPS of $0.93 on revenue of $9.73 billion. The company has already announced a fare increase for the coming months of up to $10 per ticket, its 17th fare hike this year.

United Continental Holdings, Inc. (NYSE: UAL), parent of both United and Continental airlines, has a median target price of $32 from 13 brokers. Shortly before noon today, shares are trading today at $20.23, for an implied gain of $11.77, or 58%. UAL’s forward P/E is 3.95 and the company does not pay a dividend. The stock’s 52-week trading range is $15.92-$29.75, and at today’s price that’s about 27% above its 52-week low, posted earlier this morning, and 32% below the 52-week high. UAL has followed Delta’s recent fare hike and will also report earnings next week. UAL is expected to post EPS of $2.08 on revenue of $10.14 billion.

Southwest Airlines Co. (NYSE: LUV) has a median target price of $12 from 14 brokers. Shortly before noon today, shares are trading today at $8.70, for an implied gain of $3.30, or 38%. Southwest’s forward P/E is 11.35 and the company does not pay a dividend. The stock’s 52-week trading range is $7.15-$14.32, and at today’s price that’s about 22% above its 52-week low, posted earlier this morning, and 39% below the 52-week high. Southwest reported earnings this week that were hammered by non-performing hedges. The company took a non-cash writedown of $262 million, mostly attributable to hedging.

US Airways Group Inc. (NYSE: LCC) has a median target price of $10 from 12 brokers. Shortly before noon today, shares are trading today at $5.80, for an implied gain of $4.20, or 72%. US Air’s forward P/E is 3.96 and the company does not pay a dividend. The stock’s 52-week trading range is $4.53-$12.26, and at today’s price that’s about 28% above its 52-week low, posted earlier this morning, and 53% below the 52-week high. US Air is expected to report EPS next week of $0.49 on revenue of $3.43 billion. The company expects to offset the rise in fuel prices cutting its capacity and stronger demand.

JetBlue Airways Corp. (NASDAQ: JBLU) has a median target price of $7 from 13 brokers. Shortly before noon today, shares are trading today at $4.26, for an implied gain of $2.74, or 64%. JetBlue’s forward P/E is 8.52 and the company does not pay a dividend. The stock’s 52-week trading range is $3.49-$7.60, and at today’s price that’s about 22% above its 52-week low, posted earlier this morning, and 44% below the 52-week high. JetBlue’s CFO left the company this week, prompting speculation about his reasons for doing so. CFO departures always cause headaches — and falling stock prices — particularly when there is no solid information. JetBlue is expected to report EPS next week of $0.13 on revenue of $1.2 billion.

Alaska Air Group Inc. (NYSE: ALK) has a median target price of $80.50 from 12 brokers. Shortly before noon today, shares are trading today at $64.68, for an implied gain of $15.82, or 24%. Alaska Air’s forward P/E is 7.25 and the company does not pay a dividend. The stock’s 52-week trading range is $48.14-$70.61, and at today’s price that’s about 34% above its 52-week low, posted earlier this morning, and 8% below the 52-week high. Alaska Air fell victim to the same non-performing hedge fiasco that hit Southwest and cost the company more than $77 million. The company’s revenue increase more than made up for the rise in fuel costs, but hedging sunk the ship.

Hawaiian Holdings Inc. (NASDAQ: HA), parent of Hawaiian Air, has a median target price of $8 from 5 brokers. Shortly before noon today, shares are trading today at $5.25, for an implied gain of $2.75, or 52%.Hawaiian Air’s forward P/E is 6.27 and the company does not pay a dividend. The stock’s 52-week trading range is $3.67-$8.69, and at today’s price that’s about 43% above its 52-week low, posted earlier this morning, and 40% below the 52-week high. Hawaiian Air beat EPS expectations by more than 30% in its most recent quarter and is expected to post EPS of $0.20 on revenue of $421 million for the current quarter ending in December. The company handles more than 85% of Hawaii’s intra-state traffic.

Spirit Airlines Inc. (NASDAQ: SAVE) has a median target price of $18.58 from 8 brokers. Shortly before noon today, shares are trading today at $13.86, for an implied gain of $4.72, or 34%.Spirit’s forward P/E is 8.14 and the company does not pay a dividend. The stock’s 52-week trading range is $10.18-$16.27, and at today’s price that’s about 36% above its 52-week low, posted earlier this morning, and 15% below the 52-week high. Spirit makes up for ultra-low fares with a plethora of fees. The company reports earnings next week and is expected to post EPS of $0.29 on revenue of $275 million.

So, what happens when you see “Value stocks” where analysts have seen the prices of their companies sink and where the overall price targets imply upside of 40%, 50%, or even over 60% being the “norm” in the consensus? It is a classic signal that the value stocks might actually be “value traps” where investors think they are buying something cheap but where there are problems lurking. It happens all the time. Still, these numbers are fairly hard to ignore.

Paul Ausick

Filed under: Airlines, Analyst Calls, Transports Tagged: ALK, AMR, DAL, HA, JBLU, LCC, LUV, SAVE, UAL

Top Analyst Upgrades & Downgrades (ATVI, AMR, AMD, AWK, CAH, DISCA, GME, HRBN, IVZ, JBLU, PHG, LM, MA, OXY, RCL, V, DIS, WWW, WYNN)

Administrator — Fri, 07 Oct 2011 12:26:17 +0000

These are some of this Friday’s top analyst upgrades, downgrades, and initiations seen having an impact from Wall Street research calls.

Activision Blizzard, Inc. (NASDAQ: ATVI) Started as Outperform at Baird.
AMR Corporation (NYSE: AMR) Started as Buy at Stern Agee.
Advanced Micro Devices, Inc. (NYSE: AMD) Raised to Perform at Oppenheimer.
American Water Works Co. (NYSE: AWK) Started as Neutral with $32 target at Credit Suisse.
Cardinal Health, Inc. (NYSE: CAH) named Bull of the Day at Zacks.
Discovery Communications, Inc. (NASDAQ: DISCA) Started as Neutral at JPMorgan.
GameStop Corp. (NYSE: GME) Started as Outperform at Baird.
Harbin Electric, Inc. (NASDAQ: HRBN) Cut to Neutral at Roth Capital.
Invesco Ltd. (NYSE: IVZ) Raised to Buy at BofA/ML.
JetBlue Airways Corporation (NASDAQ: JBLU) Started as Buy at Stern Agee.
Koninklijke Philips Electronics (NYSE: PHG) Cut to Underperform at Bear of the Day at Zacks.
Legg Mason Inc. (NYSE: LM) Cut to Underperform at BofA/ML.
Mastercard Incorporated (NYSE: MA) Started as Buy at Deutsche Bank.
Occidental Petroleum Corp. (NYSE: OXY) Maintained Buy but cut estimates and target at Argus.
Royal Caribbean Cruises Ltd. (NYSE: RCL) Cut to Hold at S&P Equity Research.
Visa, Inc. (NYSE: V) Started as Buy at Deutsche Bank.
Walt Disney Co. (NYSE: DIS) Started as Overweight at JPMorgan.
Wolverine Worldwide, Inc. (NYSE: WWW) named Value Stock of the Day at Zacks.
Wynn Resorts Ltd. (NASDAQ: WYNN) Raised to Outperform at Credit Suisse.

JON C. OGG

Filed under: Analyst Calls Tagged: AMD, AMR, ATVI, AWK, CAH, DIS, DISCA, GME, HRBN, IVZ, JBLU, LM, MA, OXY, PHG, RCL, V, WWW, WYNN

The Biggest CEO Apologies

247wallst — Wed, 21 Sep 2011 09:18:34 +0000

“Never apologize. It’s a sign of weakness” — John Wayne as Captain Nathan Brittles in She Wore a Yellow Ribbon (1949)

CEOs are rarely in the business of apologizing. They leave the “I’m sorry” to public relation executives or other managers down the corporate ladder. But every so often a CEO does apologize for a major mistake or misstep made by the company he or she runs, and usually the action is taken under pressure. This happened recently with the recall of more than 8 million Toyota autos (NYSE: TM) and the collapse of the Sony (NYSE: SNE) PlayStation Network. The CEOs of the two companies faced such extraordinary customer revolt and bad press that they hoped an apology would improve the reputations of their corporations. It is not clear in either case whether it has worked.

Read The Biggest CEO Apologies

The most recent case of a broad apology came from Reed Hastings, the founder and CEO of Netflix (NASDAQ: NFLX). The company now has more than 25 million subscribers in North America, which makes its customer base as large as most cable companies. Netflix’s extraordinary success has lifted its stock price up threefold from August 2010 to June 2011, when it peaked at $304.79.

Hastings believed that the popularity of the Netflix products would allow him to raise rates. He was wrong. As many as 30% of the company’s subscribers said the may quit the service. Hastings apologized and tried to explain that there had been confusions about the difference between the Netflix DVD and streaming businesses. That did not work either. Netflix shares have fallen from $210 to under $130 in one week.

24/7 Wall St. looked at the worst public relations disasters of the last decade. From that universe, we identified the ten biggest CEO apologies, where a statement from the executive was critical. Each case explains why the CEO decided to apologize and why it would have been almost impossible not to.

Filed under: General, Management Change Tagged: BAC, BP, C, F, GM, GS, JBLU, JPM, MS, NFLX, SNE, TM

Media Digest (3/6/2011) Reuters, WSJ, NYT, FT, Bloomberg

247wallst — Mon, 06 Jun 2011 10:31:03 +0000

Goldman Sachs (NYSE: GS) may release papers to investigators that show its trading behavior at the start of the credit crisis used flawed math and that the bank did not violate regulations. (WSJ)

The People’s Daily said accusations by Google (NASDAQ: GOOG) that hackers in China attacked its Gmail system may hurt its status in the country.(Reuters)

Steve Jobs will present the new Apple (NASDAQ: AAPL) iCloud product. (Reuters)

Nintendo says its network was hacked by not compromised. (Reuters)

Two senior JP Morgan (NYSE: JPM) officials are expected to leave the firm. (WSJ)

Failed CEOs often find seats on large public company boards. (WSJ)

The International Air Transport Association sharply cut its forecasts of airline profits .(WSJ)

It is now likely that new plans for Greek debt will involve rescheduled payments. (WSJ)

News Corp (NYSE: NWS) is more likely to have a joint venture partner for MySpace than to sell the social network outright. (WSJ)

Assumptions about 2011 corporate earnings may be too high because of the slowdown in the economy. (WSJ)

New cancer research finds that “personalized” therapy has been effective. (WSJ)

Iran may resist plans by Persian Gulf nations to increase oil production. (WSJ)

Portugal voters forced out the leftist party from power. (WSJ)

Egypt will get a $3 billion IMF loan. (WSJ)

Starwood management will push the company’s China plans more aggressively. (WSJ)

MGM China may expand in the nation and in Taiwan . (WSJ)

Fiat made a bid for Canada’s ownership stake in Chrysler. (WSJ)

Ebay’s (NASDAQ: EBAY) Paypal will stop its relationship with Alibaba’s AliExpress. (WSJ)

Engineers are hard to find despite high unemployment in other sectors. (WSJ)

JetBlue (NASDAQ: JBLU) pilots will vote and may become union members. (WSJ)

Bank stocks trade near lows, but some investors expect them to trade much lower (NYT)

Economists are concerned that after a bailout of Greece there will be other actions needed in other parts of Europe soon. (NYT)

Airbus is concerned that nations like China will resist EU plans to make airlines pay for carbon emissions. (FT)

Wool prices have doubled. (FT)

Tens of thousands of Greeks protested new austerity packages which will be part of a new bailout. (FT)

Treasury Secretary Geithner may support Lagarde for IMF chief in exchange for keeping an American as head of the World Bank. (Bloomberg)

A sell-off to tech stocks have taken their valuations to multi-year lows. (Bloomberg)

Prada’s IPO will raise $2.6 billion.

Douglas A. McIntyre

Filed under: Press Digest Tagged: AAPL, EBAY, GOOG, GS, JBLU, JPM, NWS

Top Analyst Upgrades & Downgrades (AEO, AAPL, AMR, ENOC, F, INTC, JCOM, JBLU, MA, MGM, NIHD, PETS, SLE, TKC)

Administrator — Mon, 16 May 2011 12:19:32 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street research calls this Monday morning.

American Eagle Outfitters, Inc. (NYSE: AEO) Raised to Positive at Susquehanna.
Apple Inc. (NASDAQ: AAPL) Reiterated Outperform and $500 target at Credit Suisse.
AMR Corporation (NYSE: AMR) Raised to Overweight at JPMorgan.
EnerNOC, Inc. (NASDAQ: ENOC) Raised to Outperform at Credit Suisse.
Ford Motor Co. (NYSE: F) Raised to Buy at Citigroup.
Intel Corporation (NASDAQ: INTC) Reiterated Outperform on Focus List at Credit Suisse.
j2 Global Communications (NASDAQ: JCOM) Raised to Outperform as Bull of the Day at Zacks.
JetBlue Airways Corporation (NASDAQ: JBLU) Raised to Overweight at JPMorgan.
Mastercard Inc. (NYSE: MA) Reiterated Buy and raised target to $325 at Argus.
MGM Resorts International (NYSE: MGM) Raised to Buy at Jefferies.
NII Holdings Inc. (NASDAQ: NIHD) Raised to Neutral at Credit Suisse.
PetMed Express (NASDAQ: PETS) Maintained Underperform as Bear of the Day at Zacks.
Sara Lee Corp. (NYSE: SLE) Raised to Overweight at JPMorgan.
Turkcell Iletisim Hizmetleri AS (NYSE: TKC) Cut to Sell at Goldman Sachs.

You are invited to join our free daily email distribution list to hear more about analyst upgrades and downgrades, top day trader and active trader alerts, dividend trends, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

Filed under: Analyst Calls Tagged: AAPL, AEO, AMR, ENOC, F, INTC, JBLU, JCOM, MA, MGM, NIHD, PETS, SLE, TKC