With earnings season under way, we are starting to analyze some of the latest results from companies and update our price targets as well as ratings on companies that we have coverage on in our EquityAnalytics department. We cover more than 125+ companies in our EquityAnalytics department. Each company is given a price target, rating, as well as Profitability, Financial Health, Management, Value, and Growth rating. Today, we are looking at Albemarle (ALB), Ashland (ASH), CA Tech (CA), DuPont (DD), and McDonald's (MCD).
ALB - Maintain at Hold, Increase PT from $52 to $57
Albemarle got a nice price target increase from $52 to $57 from us after a solid quarter from the company after the company exceeded our latest expectations. The company had a solid quarter as it raised prices and increased operating margins. The company had the ability to maintain good sales at a higher margin, which is a good sign for the company. Additionally, the company raised expectations for 2012 as it said it believes its market is going to stabilize and demand will pick up in the second half of FY 2012.
ASH - Downgrade from Buy to Hold, Decrease PT from $73.50 to $72
Ashland was downgraded from Buy to Hold as the company has increased in price, which has decreased the company's value and has limited the company's upside potential. Additionally, we dropped the PT as the company did disappoint on earnings somewhat if one removes special items. The company's sales were not up to par as it struggled to pass on higher material costs although margins did rise for the company. We believe that the company's lower sales volumes will linger somewhat, and we reduced our expectations slightly for the year. We believe that the company has upside, and it is a nice purchase on upside as the company still has value. Yet, we may see the high growth story starting to turn, and that 100+ PE may come into play.
CA - Maintain at Buy, Increase PT from $33 to $31
CA remains one of our top buy picks. The latest quarter was another sign of its potential. It is one of the top companies in the data storage arena, and CA will continue to have upside as long as growth and margins continue to improve.
DD - Downgrade from Buy to Hold, Decrease PT from $59 to $54
DuPont was downgraded after we saw a couple of red flags in the latest quarter that made us drop the price target of the company. The company saw its debt level rise in the latest quarter, which decreased the valuation of the company. Additionally, the company saw a significant rise in raw materials as well as a drop in sales volumes that we see as red flags. The company believes that this is not due to macroeconomic conditions, but we have seen several other chemical companies that are having similar issues. We believe, for now, upside is somewhat limited for DuPont until we see sales volumes come back.
MCD - Maintain at Hold, Increase PT from $109.50 to $110
McDonald's is maintained at Hold after the company reported earnings that were slightly higher than we expected, but it was not significant enough to increase our price targets. We believe MCD is a great holding. It has solid fundamentals, a good dividend, and very little downside risk. We believe it is a great holding in any portfolio, and it has upside from here. It should be picked up on any downside. The latest earnings were very solid, and it should continue to be great.Disclosure: