Goldman Sachs Research Excerpts

The big turnaround call out of Goldman Sachs today is RadioShack (RSH-NYSE).  It was raised from Neutral to Buy and next year fiscal EPS estimates are $1.20 instead of $0.95.  Goldman believes the stock can hit $25 in 12-months, up from its prior $19 target and only sees a downside to $15 if they are wrong and the turnaround fails to take hold.  RSH shares are up over 4% at $21.75 pre-market on the call.

Goldman Sachs makes adjustments to housing stocks: It raised estimates on D.R.Horton (DHI), NVR (NVR), & Ryland (RYL); and it cut earnings expectations on Beazer Homes (BZH), Centex (CTX), MDC Holdings (MDC), & Meritage (MTH).

Earnings estimates raised on Getty Images (GYI), Dolby (DLB), Tesoro (TSO), Hartford Financial (HIG), KLA-Tencor (KLAC), Verizon (VZ), Valero L.P. (VLI).  Earnings estimates trimmed on Plexus (PLXS), Sanmina SCI (SANM), Enbridge Energy (EEQ), Dreamworks (DWA), Brocade (BRCD), Volterra (VLTR), Eagle Rock (EROC), Valero GP Holdings, LLC (VEH).

Refreshes its favorite picks as Cisco Systems (CSCO), ADP (ADP), eBay (EBAY), Google (GOOG), and Fidelity National Information (FIS).

Its 5 favorite Value names are Citrix (CTXS), H-P (HPQ), Microsoft (MSFT), Verigy (VRGY), and Western Union (WU). CTXS replaced Symantec (SYMC).

Its 5-Least Favorite Picks are Business Objects (BOBJ), Motorola (MOT), Teradyne (TER), Convergys (CVG), Credence (CMOS).  CVG & MOT replace Novellus (NVLS) and Advanced Micro (AMD).

Goldman Sachs has raised its Time Warner (TWX:NYSE) target ahead of earnings tomorrow.  The Neutral rating is maintained and while it is listed as estimates trimmed the firm is really raising forward estimates.  What is interesting is that the firm raised its price target to $25.00.  Goldman is also putting 2007 EPS estimates at $1.07 and 2008 EPS estimates at $1.27.  What is interesting about this call and one that may pique interest is that it says “we cannot discuss the drivers of these changes as we remain legally restricted from discussing segments beyond AOL.”  TWX reports Q4-2006 results tomorrow and Goldman Sachs has its estimates at $12.6 Billion revenues, $3.3 EBIDTA, and $0.25 EPS (all are above consensus).

Jon C. Ogg
January 30, 2007