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BofA/Merrill Lynch Cautions on Software Valuations with Downgrades

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By 24/7 Wall St.

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In this morning’s top analyst upgrades and downgrades feature, which we run each morning, Bank of America/Merrill Lynch downgraded both Adobe Systems Inc. (NASDAQ: ADBE) and Intuit (NASDAQ: INTU) in the server and enterprise software segment. What is interesting is that both downgrades are not just on valuation. They include higher price targets on the two stocks.

As far as Adobe Systems Inc. (NASDAQ: ADBE), this was cut to Neutral from Buy, but the price target was raised to $45 from $40. BofA’s Kash Rangan said that its transition of the creative business to a subscription model is playing out and as it has approached the target price.

The Adobe report said:

We continue to see Adobe as a leading provider of Creative tools and are equally impressed by the evolution and growth prospects of Digital marketing business. However, the stock at ~$42 leaves limited room for upside in our opinion and our price objective goes to $45 from $40… Longer term, as HTML5 gains adoption, we see Adobe as well positioned with tools like Edge and Muse, and its PhoneGap acquisition to support cross-platform content creation.

Intuit Inc. (NASDAQ: INTU) was cut to Neutral from Buy, but its stock price target was raised to $71 from $65. The firm supports management and the ability to execute, although the stock is up 180% over the past four years, and it is said to be baking in a solid tax season already.

On Intuit, BofA noted positive trends for H&R Block Inc. (NYSE: HRB). It said:

Latest tax data from H&R Block indicated it grew faster than INTU in February, and if this trend persists through the season, it may risk INTU‘s tax units’ goal. However, we think it is still early and Intuit is likely to make up for any share losses later.

Intuit’s stock has fallen further on this downgrade and is down by 2.2% at $66.26, against a 52-week range of $53.38 to $68.41. Adobe’s stock price is down 0.6%, at $41.25 against a 52-week range of $29.52 to $41.91.

Filed under: 24/7 Wall St. Wire, Analyst Calls, Software, Technology, Technology Companies Tagged: ADBE, HRB, INTU

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

24/7 Wall St. Closing Bell — March 8, 2013: Markets Maintain Buying Trend (TIF, SKUL, TWX, HL, AAPL, FNSR, HRB, P, WDAY, ANN, FL, CSIQ, CHYR, DKS, RENN, P, VALE, VOD)

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By 24/7 Wall St.

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U.S. equity markets opened higher this morning mostly on the strength of a far-better-than-expected report on U.S. non-farm payrolls and a lower-than-expected unemployment rate of 7.7% (more coverage here). In Europe, German industrial production was flat while Spain’s declined a bit less than estimated. The French prime minister said the county needs to save €5 billion in spending this year, and he expects to achieve that through spending cuts. In Asia, Japan’s GDP growth for the fourth quarter was revised to flat with the previous year, again better than expected. The country also posted a small — and unexpected — trade surplus. China’s trade surplus was also larger than expected, likely due to the impact of the lunar new year holiday in February. Fitch downgraded Italy’s sovereign debt shortly after noon, briefly chilling investors (more coverage here).

The U.S. dollar index rose 0.73% today, now at 82.686. The GSCI commodity index is up 0.8% at 646.65, with commodities prices mixed today. WTI crude oil closed up 0.4% today, at $91.95 a barrel, up 1.4% for the week. Brent crude trades down 0.3% at $110.85 a barrel. Natural gas is up 1.3% today at about $3.63 per million BTUs. Gold settled up fractionally today at $1,576.90 an ounce, and up 0.3% for the week.

The unofficial closing bells put the DJIA up about 63 points to 14,392.46 (0.44%), the NASDAQ rose about 12 points (0.38%) to 3,244.35, and the S&P 500 rose 0.42% or more than 6 points to 1,550.77.

There were a several analyst upgrades and downgrades today, including Tiffany & Co. (NYSE: TIF) cut to ‘sell’ at Canaccord Genuity; Skullcandy Inc. (NASDAQ: SKUL) cut to ‘underweight’ at Piper Jaffray and cut to ‘underperform’ at Raymond James and D.A. Davidson; Time Warner Inc. (NYSE: TWX) raised to ‘buy’ with a price target of $68 at Argus; Hecla Mining Co. (NYSE: HL) raised to ‘buy’ at Global Hunter; and Apple Inc. (NASDAQ: AAPL) reiterated as ‘outperform’ with a price target of $600 at Credit Suisse.

Earnings reports since markets closed last night resulted in several price moves today, including these: Finisar Corp. (NASDAQ: FNSR) is down 8.7% at $14.46; H & R Block Inc. (NYSE: HRB) is up 9.2% at $27.27 after posting a new 52-week high of $27.50 earlier today; Pandora Media Inc. (NYSE: P) is up 17.1% at $13.74 after posting a new 52-week high of $14.70 earlier today (more coverage here); Workday Inc. (NASDAQ: WDAY) is up 0.9% at $62.20; Ann Inc. (NYSE: ANN) is up 7.7% at $31.23; and Foot Locker Inc. (NYSE: FL) is down 6.9% at $32.89 (more coverage here).

Before markets open Monday morning we are scheduled to hear from Canadian Solar Inc. (NASDAQ: CSIQ), Chyron Corp. (NASDAQ: CHYR), Dick’s Sporting Goods Inc. (NYSE: DKS), and Renren Inc. (NASDAQ: RENN).

Some standouts among high-volume stocks today include:

Pandora Media Inc. (NYSE: P) is up 17.1% at $13.74. This Internet radio company not only posted results that investors liked, the company’s CEO announced that he is leaving.

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Source: FULL ARTICLE at DailyFinance