Analyst Actions: AMR, Delta, Continental, Goldman Sachs

AMR CORP. (AMR)

JPMorgan upgrades several airlines including AMR

Analyst Jamie Baker says he doesnt believe equities [or credit for that matter] have sufficiently responded to sharply lower fuel prices and resulting likelihood of profit resumption in 2009. Given the combination of improved non-fuel fundamentals, bolstered liquidity for many, and equity values meaningfully below March levels, Baker is significantly revising his estimates and equity ratings for North American airlines. He notes jet kerosene prices have plummeted over $1/gallon from recent highs, representing over $1/gallon on reduced annualized expense. Baker upgradeed AMR and Continental (CAL) to overweight from underweight; Delta Air Lines (DAL) and Alaska Air (ALK) to overweight from neutral; and Northwest Airlines (NWA) to neutral from underweight.

GOLDMAN SACHS GROUP (GS)

Oppenheimer cuts EPS estimates, Deutsche Bank downgrades to hold from buy

Oppenheimer analyst Meredith Whitney says shes cut her third-quarter EPS estimate for Goldman to $2.15 from $3.54, her fiscal 2008 [Nov.] forecast to $14.32 from $15.75, and her fiscal 2009 projection to $14.90 from $16.30. Whitney says the primary drivers for these revisions are customer volumes, overall weak global equity markets, and weak advisory and underwriting revenues. She notes debt issuance in the U.S. and Europe is down over 70% year to date and trading volumes remain in negative territory. Whitney says as Goldmans revenues are relatively the most equity-linked of its broker peers, the fact that broad global equity market indices are all down double-digits will have a meaningful effect on the companys earnings. She rates the shares market perform.

Deutsche Bank analyst Mike Mayo says Goldman has among the highest exposures to equities during a period of more significant equity market declines, including areas of expansion such as China. The result is likely to be weaker-than-expected EPS, which, while not of the problems of others, should show that Goldman is not immune to capital market pressures, especially given perhaps weaker European growth. Mayo rates Goldman hold given EPS pressure mitigated by likely market share gains. He cut his below-consensus EPS estimates: for the third quarter, to $2.40 from $3.25 [vs. consensus $3.64]; for fiscal 2008, to $14.60 from $16.25 [vs. 16.64]; and for fiscal 2009, to $15.55 from $16.20 [vs. $19.78]. He also lowered his target price on the stock to $192 from $209.

ZOLTEK COMPANIES, INC. (ZOLT)

RBC Capital cuts to underperform from sector perform

Analyst Stuart Busch says the companys third-quarter results shortfall was much more substantial than even his expectations. He believes that core wind end-market growth thesis of Zoltek diminishes from limited new turbine customers, reduced demand from primary customers Vestas and Gamesa. He notes the companys 10-Q also reveals a six-month delay vs. previous guidance in new fiber line production at its Mexico plant to the end of December, highlighting either operational or demand problems. Busch says the companmy faces several fundamental headwinds; rising raw material costs, new competitive entrants, and slower end market adoption. He sees few near-term upside catalysts, and management execution and credibility remain a concern. He cut his price target to $15 from $28.