October 15, 2008
Analyst Actions: Bank of America, SunTrust, JA Solar, Suntech Power
CITIGROUP UPGRADES BANK OF AMERICA, 12 OTHER BANKS
Citigroup analyst Keith Horowitz says the government's capital injection plan is a game changer, with the Treasury Dept. moving to address greater issues facing banks - capital, liquidity in form of depositor protection, ability to issue debt.
Horowitz notes that $250 billion has been allocated to buy preferred stock in U.S. banks. He views Bank of America (BAC) as the greatest gainer from capital injection plan among large-caps; he considers BB&T (BBT) as the best positioned among mid-caps.
He upgrades BAC, BBT, First Horizon National (FHN), Fifth Third Bancorp (FITB), Huntington Bancshares (HBAN), KeyCorp (KEY), Marshall & Ilsley (MI), M&T Bank (MTB) and Zions Bancorp (ZION) to buy from hold; Comerica (CMA), Regions Financial (RF) and SunTrust Banks (STI) to buy from sell; US Bancorp (USB) goes to hold from sell.
MORGAN KEEGAN UPGRADES SUNTRUST, OTHER BANKS
Morgan Keegan analyst Robert Patten says he is upgrading to neutral his view of the fundamental operating environment for banks; and he raises his opinions on SunTrust Banks (STI), Marshall & Ilsley (MI), Synovus Financial (SNV) and Zions Bancorp (ZION) to outperform from market perform.
Patten sees the bank sector benefitting from Treasury's plan to inject up to $250 billion in capital via preferred shares in U.S. banks; along with FDIC's backstopping new debt issuance, all noninterest bearing deposits.
In turn, he sees STI, MI, SNV, and ZION benefitting from any improvement in the environment for private capital coming into U.S. banks.
WEISEL CUTS JA SOLAR, SUNTECH TO MARKET WEIGHT FROM OVERWEIGHT
Weisel analyst Jeff Osborne sees limited credit availability for solar project developers impacting the sector in the first half of 2009. He believes the first quarter 2009 will be down sequentially from a healthy fourth quarter 2008.
Osborne notes that financing talks today typically impact projects several months into future; many projects in Europe are based off LIBOR, which up nearly 200 basis points recently.
He says the looming black hole of solar demand in 2009, pricing uncertainty, and weak customer base heighten the risk to JA Solar Holdings (JASO), so he cuts $2.18 2009 EPS estimate to $1.57, $22 price target to $8.
He also cuts Suntech Power Holdings (STP) $2.72 2009 EPS estimate to $2.51 and $54 price target to $24.