Carnival Corp. (NYSE: CCL) Maintained Hold but cut estimates at Argus.
Chesapeake Energy Corporation (NYSE: CHK) Cut to Hold at Brean Murray.
Cheniere Energy Inc. (NYSE: LNG) Started as Outperform with $13.50 target at Credit Suisse
Cheniere Energy Partners, LP (NYSE: CQP) Started as Neutral with $20 target at Credit Suisse.
Cree Inc. (NASDAQ: CREE) maintained Buy with $33 target at Canaccord Genuity; Raised to Buy at ThinkEquity; Cut to Neutral at Ticonderoga.
Expedia, Inc. (NASDAQ: EXPE) Started as Underweight at JPMorgan.
France Telecom S.A. (NYSE: FTE) Cut to Sell at Deutsche Bank.
Google Inc. (NASDAQ: GOOG) Cut to Market Perform from Outperform at Wells Fargo.
Janus Capital Group, Inc. (NYSE: JNS) Cut to Sell at Citigroup.
The Kroger Co. (NYSE: KR) Cut to Market Perform at BMO Capital.
MGM Resorts International (NYSE: MGM) Raised to Neutral at Credit Suisse.
Office Depot, Inc. (NYSE: ODP) Raised to Equal-weight at Barclays.
OfficeMax Inc. (NYSE: OMX) Raised to Equal-weight at Barclays.
PVH Corporation (NYSE: PVH) Started as Neutral with $72 target at Credit Suisse.
Ralph Lauren Corporation (NYSE: RL) Started as Outperform with $168 target at Credit Suisse.
Telefonica SA (NYSE: TEF) Cut to Sell at UBS.
Textron Inc. (NYSE: TXT) Cut to Neutral at JPMorgan.

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JON C. OGG

Read the ten best online stores this holiday
Read the ten worst online stores this holiday 

To put those customer service rankings in context, we looked at how the parent companies that own the websites have performed recently.  We found that a strong customer service rating often coincides with a company that has widely regarded brands.

It begs the question: Does Apple (NASDAQ: AAPL) have such a high customer service ranking because so many consumers love the Apple brands? Or, is Apple’s customer service for online shoppers really superior to that of other e-commerce businesses? Apple is tied for second place in the index. Amazon.com is in first place. It also has a sterling reputation with consumers, as do some of its major products like the Kindle.

At the bottom of the ForeSee index are Gap (NYSE: GPS), Sony (NYSE: SNE) and Overstock (NASDAQ: OSTK). Gap recently said it would close 21% of its U.S. flagship stores. Sony has had trouble gaining sales for its PCs, games, smartphone and TV products. Overstock, an also-ran online department store, was founded in the days of the dial-up internet. It is hard to see how any of these could be at the top of the list. Or, perhaps if they were at the top of the list, they would not be in such deep trouble now.

ForeSee’s E-retail Satisfaction Index included the top 40 retailers by sales. The company surveyed 8,500 customers between Thanksgiving and Christmas. Despite its shortcomings, 24/7 Wall St. used the data from ForeSee as a foundation, because it is a reasonable measurement of the experience that consumers have with specific e-commerce sites, whether those sites are part of highly successful companies or ones on the verge of failure.

There is also some evidence that a few troubled retailers have actually performed well online. Whether that success is enough to save the companies themselves is impossible to tell. One such example is Avon (NYSE: AVP), with online service that is tied for second among all e-commerce sites in the ForeSee index. But Avon recently posted a disastrous quarter, and its CEO of 12 years was dismissed. Similarly, JCPenney’s (NYSE: JCP) online operations’ customer satisfaction is equal to Apple’s, which is also tied for second place in the ForeSee rankings. However, JCPenney has lost sales to big-box retailers such as Walmart (NYSE: WMT) for years. It is worth noting that JCPenney just hired the head of retail stores at Apple to turn the bricks-and-mortar retailer around. Apple is one of the few companies that was successful online long before it began to build physical stores.

These are the the companies with the best and worst online customer satisfaction. To draw our conclusions about why they are on the list and what the relationship is between the companies and their e-commerce operations, we examined three factors: the ForeSee satisfaction data, the annual sales of each of the companies, and the amount of traffic each site had in November — the most recent month measured by audience research firm Compete.com. Foresee describes its rating as “Average customer satisfaction with the top 40 U.S. e-retail websites increased by one point this year to tie 2009’s all time high score of 79 on the study’s 100-point scale. Satisfaction scores for individual e retailers span a 16-point  range, from a high of 88 (Amazon) to a low of 72 (Overstock).”

Amazon.com (NASDAQ: AMZN) ranked first. That makes sense. Amazon is the world’s largest e-commerce company. Without excellent customer service, it would not hold that position for long. Amazon’s revenue has grown at a rate near 50% for the past two quarters.

The bottom of the list is littered with some companies that have deeply offended customers in some way. Netflix (NASDAQ: NFLX) is there. It raised rates and confused its subscribers with a jumble of explanations. The Gap (NYSE: GPS) is near the bottom as well. Gap’s image probably was not helped when it announced that it would shutter 21% of its flagship stores in the U.S. The news almost certainly undermined employee morale as well. This should have spilled over into customer service problems.

The bottom of the list also contained some firms that have to improve customer relations if they are to recover from terrible sales problems that have persisted for years. All three office suppliers fall toward the troubled part of the list: Office Depot (NYSE: ODP), Staples (NASDAQ: SPLS) and Office Max (NYSE: OMX). And of course, as should be expected — Sears (NASDAQ: SHLD) is there.

Customers probably see company e-commerce efforts through the same lens as efforts and satisfaction in bricks-and-mortar operations. That shows up in the ForeSee report.

Douglas A. McIntyre

Over the past four weeks, both Staples and Office Max have seen their target prices drop. At Staples, the median target price fell from $19.00 to $18.00. The share price today is $14.40, indicating a potential upside of 25%. At Office Max, the median price target fell from $7.50 to $6.75, indicating a potential upside of 42.1%. At its current earnings multiple of about 8, Office Max could be a contender, but the company is closing stores and only expects revenue to be flat with last fiscal year. The company’s price/book ratio is also a very low 0.62, but again, that could be deceptive.

Staples’ median target price has fallen further below its 52-week high in the past month and its price/book ratio is pretty high at 1.40. The company reported weak sales and earnings, and like all the office supply stores, traffic is down. The trend is particularly bad in Europe. Staples may hit its revenue and profit targets for the quarter and the year, but that’s only because the estimates have come down.

Barnes & Noble missed revenue and profit estimates yesterday, but the stock continues to rise because sales of the company’s Nook e-readers and tablets have risen sharply (85%, to $200 million) and investors believe the trade-off for book sales is a positive sign. B&N’s median target price rose from $15.50 to $20.00 over the past four weeks, and at today’s price of $16.15, the potential upside is 23.8%. Nook sales account for just over 10% of the company’s total revenue, so unless sales continue to climb at last quarter’s rate, B&N’s chances of fulfilling its promise are pretty slim. The company’s forward P/E is 37.42 and the price/book ratio is 1.09, which could lead one to believe that the stock may be approaching an overbought status. The company’s share price has risen by about 25% in the past 12 months.

Sotheby’s median price target fell from $51.00 to $45.00, and at a current price of $32.14, the stock’s potential upside is 40%. That figure would be cause for more joy if Sotheby’s share price hadn’t fallen by -7% in the past month and if the target price were still about the 52-week high. Sotheby’s forward P/E is 10.79, but its price/book ratio is 2.47. For the fiscal year ending this month, Sotheby’s EPS estimate has fallen by -$0.23 in the past 90 days. This does not look like a company about to bust its target price.

PetsMart has a median target price of $53.50, a rise of $3.50 over the past four weeks. At today’s share price of $48.95, the potential upside for the stock is 9.3%. The company beat third-quarter earnings and revenue expectations and boosted its fourth-quarter EPS estimate to $0.85-$0.89. Shares put up a new 52-week high of $49.03 today. The company’s forward P/E is 16.36, and its price/book ratio is a fairly high 4.66. But sales and profits have been growing, and the stock price is up about 25% this year.

Share price gains have fallen about equally on B&N and PetsMart in the past year. The other stocks we’ve looked at have lost between -25% and -75%, with Office Max the biggest loser. B&N also boasts a 5.7% dividend yield, compared with just 1.2% for PetsMart.

PetsMart’s 9.3% potential upside is within reach as long as the store sticks to its business, while B&N’s potential gain of nearly 24% depends on selling boatloads of its Nook devices, which is possible and  perhaps even likely. But as that happens B&N cannibalizes its old business and that may be hard to make up quickly.

Paul Ausick

The companies we’re looking at include Office Depot, Inc. (NYSE: ODP), Office Max Inc. (NYSE: OMX), Staples, Inc. (NASDAQ: SPLS), Barnes & Noble, Inc. (NYSE: BKS), Coinstar, Inc. (NASDAQ: CSTR), Sotheby’s (NYSE: BID), Tractor Supply Co. (NASDAQ: TSCO), Titan Machinery Inc. (NASDAQ: TITN), PetSmart Inc. (NASDAQ: PETM), and Luxottica Group S.p.A. (NYSE: LUX).

Diversity aside, most of these stocks have very high implied gains, which means either that they are worth a second look or that there is no hope that any will ever hit their targets and that a lower target is soon to come. Which result will occur depends to a large extent on competitors in the same business, the overall economy, and whether consumers regain some of their lost confidence.

All data from Yahoo! Finance, with current prices taken at about noon today.

Office Depot, Inc. (NYSE: ODP) has a median target price of $4.00 from 13 brokers. Shares are trading today at $2.30, for an implied gain of $1.70, or 74%. Office Depot’s forward P/E is 28.5 and the company does not pay a dividend. The stock’s 52-week trading range is $1.75-$6.25, and at today’s price that’s about 31% above its 52-week low, posted earlier this morning, and 63% below the 52-week high.

Analysts didn’t expect much from Office Depot in the third quarter, and the company failed to deliver even that. EPS was break-even compared with an expected EPS of $0.01. Revenue also missed estimates. The implied gain in this stock is purely illusory when you consider its earnings and its immodest forward P/E.

Office Max Inc. (NYSE: OMX) has a median target price of $7.50 from 14 brokers. Shares are trading today at $5.10, for an implied gain of $2.40, or 47%. Office Max’s forward P/E is 7.39 and the company does not pay a dividend. The stock’s 52-week trading range is $3.90-$19.20, and at today’s price that’s about 31% above its 52-week low, posted earlier this morning, and 73% below the 52-week high.

Office Max reported that net income rose last quarter but revenue fell, as a result of cost-cutting measures. The company expects full-year revenue to be flat with last year. The company also plans to continue closing stores. There’s little long-term happiness in store for the company.

Staples, Inc. (NASDAQ: SPLS) has a median target price of $19.00 from 16 brokers. Shares are trading today at $14.69, for an implied gain of $4.31, or 29%. Staples’ forward P/E is 9.58 and the company pays a 2.8% dividend yield. The stock’s 52-week trading range is $11.94-$23.75, and at today’s price that’s about 23% above its 52-week low, posted earlier this morning, and 38% below the 52-week high.

Staples has been rumored as a possible buyer of either Office Depot or Office Max or both. The company’s market cap of $10.5 billion is about 10X the market cap of the other two combined, so such a deal is not out of the question. Staples’ target price is now lower than its 52-week high, a sign that analysts don’t expect a lot of growth. That could either spur the company to go ahead with an acquisition or cause it to sit on its hands.

Barnes & Noble, Inc. (NYSE: BKS) has a median target price of $15.50 from 4 brokers. Shares are trading today at $11.52, for an implied gain of $3.98, or 35%. B&N’s forward P/E is 33.87 and the company pays a huge 8.1% dividend yield. The stock’s 52-week trading range is $10.30-$12.65, and at today’s price that’s about 12% above its 52-week low, posted earlier this morning, and 9% below the 52-week high.

B&N is trying to keep up with Apple Inc. (NASDAQ: AAPL) and Amazon.com (NASDAQ: AMZN) in the e-reader/tablet market. The company is set to announce a new entrant in its Nook device family on Monday. Somehow, taking on the two biggest players in the market with a device that costs more than a comparable device from Amazon and has far less capability than an Apple iPad just doesn’t seem like a long-term winning strategy.

Skip to the eight worst-performing retail chains in America

Analysts predict that the holiday shopping season will be difficult for many retailers this year. The National Retail Federation reported that industry sales will be up only 2.8% to $465.6 billion, not enough to make up for three brutal years. Thousands of stores have been closed as a consequence of a drop in retail activity because of the recession. Stores closures for many retailers will continue.

Several of the largest retailers have consistently performed poorly between 2005 and 2010 for reasons that go beyond the recession. 24/7 Wall St. has identified the eight retailers that lost the most in total sales during that period. The stores that fared the worst have a great deal in common.

First, some specialty retailers compete with larger chains. This is certainly the case for Foot Locker because the big box retailers and most department stores sell high-end athletic shoes.

The presence of direct competitors that are similarly sized is yet another reason for the poor performance of some stores on the list. The office products retail sector is occupied by Office Depot, Office Max and Staples. Walmart’s Sam’s Club has created lines of merchandise that also compete in the same market.

The third reason that some of the retailers have done poorly is weak management. Robert Nardelli was a former Jack Welch lieutenant at GE. Nardelli was passed over for Welch’s job. He was hired by Home Depot to run the company after he failed to get the promotion. Between 2000 and 2007, Nardelli managed to alienate both employees and shareholders with poor results and his extravagant pay packages. JCPenney has had similar management problems. Poor merchandising decisions by CEO Mike Ullman, who has run the company since 2004, hurt revenue. He was recently replaced by the head of Apple’s retail store operation, Ron Johnson.

The retail industry has fared relatively well in the past five years, despite the recession, buoyed by strong sales during 2005 to 2007. GDP grew by 16% over these same five years. Also, most big operators have been able to increase revenue since the middle of the last decade. U.S. Sales at industry giants such as Walmart, Target and Costco have risen by 21%, 13% and 28%, respectively. With $600 billion a year in combined sales, the trio are a reasonable proxy for the entire industry.

To identify the large retailers in America with the worst sales, 24/7 Wall St. reviewed data published by National Retail Federation’s Stores Magazine. We relied on “Top 100 Retailers” list to identify the retailers that had lost the most in annual retail sales from 2005 to 2010. Only public companies were ranked in order to demonstrate how declining sales affect the overall health of corporations. Because sales numbers can be distorted, companies with significant M&A activity were also excluded.

These are America’s eight disappearing store chains.

The convenience of online shopping and the ability to make price comparisons on the Internet has completely changed retail trends in the past decade. Amazon.com (NASDAQ: AMZN) and other e-commerce sites have already taken a significant lead. Amazon’s revenue in the latest quarter grew 51% to $9.9 billion. If revenue continues to increase at this rate, Amazon will become a $60 billion company next year. That is larger than Lowe’s or Best Buy, and it makes brick-and-mortar retailers shudder.

24/7 Wall St. has analyzed the effectiveness of the e-commerce operations at 25 huge, publicly traded retailers in the U.S. We looked at total revenue for 2010 based on SEC filings. We then considered each company’s web traffic for July 2011 based on data from Experian Hitwise, a research company that measures online audiences. We looked at the total traffic of each company and its share of traffic among the 25 retailers.

This list includes the worst ten retailers in terms of the ratio of annual revenue to the company’s share of Internet traffic among the retailers in July. A retailer with very large revenues but low Internet visits has done a poor job of getting more customers to shop online. Naturally, the largest online retailer, Amazon, received the best e-commerce effectiveness score of 2.1. The higher the score, the worse the performance.

Some of the results are to be expected. Pharmacies and home supply stores such as Home Depot and CVS Caremark do not do particularly well. It seems that although the companies have well-established e-commerce operations and sophisticated websites, people tend to shop for drugstore items and building materials by visiting physical locations. Still, these companies cannot ignore e-commerce, because people increasingly buy items of nearly any kind online.

The most notable result of the analysis is how poorly Walmart did, given its position as the number one retailer in the world and tremendous financial and merchandising resources. Walmart received one of the worst ranks among all the companies considered. Walmart.com is the second most visited e-commerce site on the Internet, based on Hitwise numbers. But the portion of Walmart’s sales that come from e-commerce are extremely small — less that 2%, or $6 billion, according to analysts from Wells Fargo Securities. Craig Johnson, president of Customer Growth Partners LLC, told Bloomberg, “Wal-Mart has been lagging in e-commerce, and the loss of two executives won’t help where the company’s going. It will be challenging for them to build the momentum they need.” The world’s largest retailer recently dismissed its two senior online executives.

The Ten Biggest Stores With No Online Shoppers

The company’s second quarter earnings rose more than 35% as it improved on sales.  This translated to $0.22 EPS and Thomson Reuters had estimates of $0.20 EPS.  The company sees next quarter earnings in a range of $0.46 to $0.48 EPS and sees sales gaining by the low single-digits while Thomson Reuters has estimates of $0.46 EPS.

Staples sees 2011 adjusted earnings at $1.39 to $1.45 EPS versus a prior range of $1.35 to $1.45 EPS, and the actual was put at $1.42 to $1.48 EPS.  Whichever figure you use, Staples is ahead of plan (Thomson Reuters has estimates of $1.37 EPS) at a time when uncertainty is supposed to be taking down numbers rather than helping numbers.  The company also backed 2011 sales growth in the low single-digits.  As far as free cash flows, that is projected to be more than $1 billion for the year.

So, here is why today’s results are also catapulting the stock… The most recent short interest data was 30.49 million shares.  That is the highest reading in at least a year when the settlement day’s price was $16.06.  At the peak of selling last week, Staples actually dipped under $12.00 briefly.  Shares are up 1.5% at $14.44 so far but profit taking has taken shares down from nearly $15.50 earlier this morning.  The 52-week range is $11.94 to $23.75.

The rival in office products is Office Depot, Inc. (NYSE: ODP) and the stock was raised to Neutral from Sell by UBS this morning.  OfficeMax Incorporated (NYSE: OMX) is up 0.5% at $6.11 today as well.

Maybe the world of office supplies and real products is not as dire as it seemed before last week.

JON C. OGG

BP plc (NYSE: BP) Raised to Buy at BofA/ML.
Brocade Communications Systems, Inc. (NASDAQ: BRCD) Started as Buy with $8 target at Janney.
Cisco Systems, Inc. (NASDAQ: CSCO) Started as Neutral with $18 target at Janney.
Deere & Co. (NYSE: DE) Cut to Hold at Jefferies.
EMC Corporation (NYSE: EMC) STarted as Buy with $34 target at Janney.
Encore Wire Corporation (NASDAQ: WIRE) maintained Strong Buy as Value at Zacks.
Intel Corporation (NASDAQ: INTC) Cut to Sell at Goldman Sachs.
Juniper Networks, Inc. (NYSE: JNPR) Started as Buy with $48 target at Janney.
Lam Research Corporation (NASDAQ: LRCX) Raised to Buy at Goldman Sachs.
NeAtpp, Inc. (NASDAQ: NTAP) Started as Neutral at Janney.
North American Palladium Ltd. (AMEX: PAL) Raised to Neutral at BofA/ML.
OfficeMax Incorporated (NYSE: OMX) Cut to Perform at Oppenheimer.
Petroleum Development Corporation (NASDAQ: PETD) Raised to Outperform at Credit Suisse.
Staples, Inc. (NASDAQ: SPLS) Cut to Perform at Oppenheimer.
Suntech Power Holdings Co. Ltd. (NYSE: STP) Cut to Neutral at Collins Stewart.
Teradyne Inc. (NYSE: TER) Started as Buy at Citigroup.
Universal Tech Institute (NYSE: UTI) Maintained Underperform as Bear of the Day at Zacks.
Virgin Media, Inc. (NASDAQ: VMED) Raised to Outperform as Bull of the Day at Zacks.

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JON C. OGG

Recessions also rob businesses of the ability to compete effectively on price. A downturn hurts sales. This takes away the flexibility for businesses to offer discounts, unless their balance sheets are strong enough to fund losses in exchange for improved market share. Big companies such as Wal-Mart can afford to take a long view. Much smaller ones including OfficeMax probably cannot.

The American Customer Satisfaction Index is as close to the gold standard for the measurement of customer service. ACSI reports scores on a 0-100 scale at the national level and produces indexes for 10 economic sectors, 45 industries (including e-commerce and e-business), and more than 225 companies.

The ASCI data which was just released on the retail and e-commerce industries shows an erosion in consumer satisfaction scores. It is the largest drop the research operation has reported since 2008 – at the depth of the recession.

National ACSI figures for all economic sectors were off to 73.5 in the fourth quarter compared to 75.7 in the third. The national retail number fell from 76.2 in 2009 to 75 in 2010. E-commerce dropped even more from 81.4 to 79.3 year compared to the previous year.

24/7 Wall St. reviewed the data to find the companies which were hardest hit in the ratings from 2009 to 2010. We picked only firms with satisfaction ratings down at least 2% year-over-year with the goal of finding common themes between the companies, or at least reasons why they are performing worse than their peers.

After reviewing the data, 24/7 Wall St. observed several key attributes in common between the companies on this list.  Companies which were in the number 2 or number 3 spot behind a large industry leader often did very poorly. These companies include Target (NYSE: TGT), Lowe’s (NYSE: LOW), OfficeMax (NYSE: OMX) and Newegg. Firms which are not in the top spot for their sector often do not have the financial resources of their larger competitors. They are often the first to begin layoffs, meaning their staff-per-location falls along with morale, and often the number experienced workers. People who have been with a company the longest often earn the most. As they are laid off, institutional knowledge is bled out of a company. Cheap becomes expensive.

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Although satisfaction with e-commerce fell, it still is well ahead of the average ratings for bricks-and-mortar retailers. It is hard for Barnes & Noble to get a higher rating than Amazon.com. Amazon has more inventory, a wider array of products, and a cost base that makes discounting a more reasonable business tactic. SUPERVALU and other grocery chains have very little e-commerce capacity and operate in an industry in which inflation drives food prices higher nearly every week. SUPERVALU has to try to pass that along to its customers.

It’s too early to say whether these scores will rebound with the end of the recession. Americans may have become inured to poor service. They expect that companies which have cut costs will try to maintain the profits that fewer people and services for the customer allows. The ASCI scores may continue to fall because in the case of many consumers, their alternatives for purchasing books, groceries or clothes are severely limited. Retailers can afford to cut corners when their customers have few options.

9. Newegg
> Industry: Internet Retail
> % Change In The Last Year: -2.3%
> % Change Since First Year Of Rating: -3.4%
> % Change of Industry In The Past Year: -3.6%

In 2008, Newegg led the Internet retail industry in customer satisfaction. The company is now behind both Amazon and Netflix, with a score of 84. Newegg.com, an online consumer electronics retailer originally focused on discount computer components, has now expanded to consumer electronics, including televisions and digital cameras. This shift to a wider range of products, and customers, has led to less impressive deals in many cases.   Many people simply looking for a better price on a flat-screen TV are now confused by a website originally designed for tech-savvy consumers.

8. Barnes & Noble
> Industry: Specialty Retail Stores
> % Change In The Last Year: -2.4%
> % Change Since First Year Of Rating: -1.2%
> % Change of Industry In The Past Year: +1.3%

Barnes & Noble currently has a customer satisfaction score of 82, a decrease of 2.4% from 2009. The company may suffer more than any retailer on this list in comparison to a larger online rival. Amazon.com has many more titles online than Barnes & Noble has in stores. The online Barnes & Noble brand attracts far fewer visitors than Amazon, which also offers a wide array of products besides books. Furthermore, Amazon has been able to market its Kindle e-reader as superior to the Barnes & Noble Nook. All of these taken together are a good demonstration of why bricks-and-mortar operations are losing customers to their large e-commerce competitors. Customer satisfaction is based on selection, ease of access and price.