Analyst Actions: Delta, PG&E, Heinz, Exelixis

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Delta's

(DAL) - Get Report

had its share of problems lately, fighting a bitter contract battle with its pilots that cost it a healthy chunk of change when the pilots cut their overtime flying, and thus the number of flights Delta can offer. Meanwhile, competitors have been merging, with

AMR

(AMR)

,

American Airlines'

parent, announcing intentions to pick up

Trans World Airlines

(TWA)

and

UAL

(UAL) - Get Report

,

United Airlines'

parent, snapping up most of

U.S. Airways

(U) - Get Report

.

And over the last few weeks, Delta's stock has dropped 15% as investors reacted to the state of the industry, feeling that maybe Delta will be hurt by labor woes and the lack of a merger partner.

Well, don't tell that to

Merrill Lynch

analyst Michael Linenburg. In a note to investors this morning, the analyst wrote that Delta was in pretty good shape with labor, assuming no strike occurs, and the problem fully priced into its low

price-to-earnings ratio. He is "cautiously optimistic" that Delta can resolve its pilot problem by the end of spring, with no real labor problems in sight after that, since the rest of its workers are not heavily unionized.

Linenburg was very "glass half full" on Delta, even saying that its lack of a merger partner was a benefit, not a detriment.

"Contrary to popular belief, this could be the best situation for Delta to be in," he wrote. "Especially given the massive disruption associated with airline mergers and acquisitions. Therefore, at under $46, we think Delta is an attractive contrarian investment, and would be Buyers of the stock."

The skies just got a little friendlier.

Upgrades

Ariba

(ARBA)

: UP to buy from market perform at

Lehman Brothers

.

Capital One

(COF) - Get Report

: UP to long-term buy from long-term attractive at

Robertson Stephens

.

Federated Investors

(FII) - Get Report

: UP to outperform from neutral at

Salomon Smith Barney

.

PG&E

(PCG) - Get Report

: UP to hold from sell at

Prudential Securities

.

Waddell & Reed

(WDR) - Get Report

: UP to outperform from neutral at Salomon Smith Barney.

Downgrades

American Eagle

(AEOS)

: DOWN to long-term attractive from long-term buy at Robertson Stephens.

Bausch & Lomb

(BOL)

: DOWN to market perform from buy at Lehman Brothers.

Dendrite

(DRTE)

: DOWN to hold from accumulate at Prudential Securities.

H.J. Heinz

(HNZ)

: DOWN to neutral from outperform at

Salomon Smith Barney

.

Initiations

Argosy Gaming

(AGY)

: NEW buy at

Deutsche Bank Alex. Brown

; price target: $25.

Aztar

(AZR)

: NEW buy at Deutsche Bank Alex. Brown; price target: $15.

Exelixis

(EXEL) - Get Report

: NEW buy at J.P. Morgan; price target: $23.

Proton Energy

(PRTN)

: NEW strong buy at Lehman Brothers.

Research In Motion

(RIMM)

: NEW long-term buy at J.P. Morgan; price target: $85.

As originally published, this story contained an error. Please see

Corrections and Clarifications.