Analyst Comments

FBR Capital reiterates an Outperform rating on KKR Financial (NYSE: KFN), raises price target from $6.25 to $7.

FBR analyst says, "We remain buyers of KFN shares at a discount to book value for several reasons. As long as corporate credit markets continue their upward bias, KFN book value should benefit. From a
"core" earnings perspective, KFN shares trade at 4.1x annualized 3Q09 operating EPS of $0.34, which is a true measure of cash flows generated from the investment portfolio. Based on the company's sufficiently liquid balance sheet at 3Q09 end, we believe that KFN is close to making a dividend payment, albeit a small one at this juncture. The ability to pay a larger dividend going forward is primarily based on KFN's remaining two CLOs returning to compliance.> To that end, as of September 30, 2009, CLO 2007-A was very close to being in compliance with covenants, which would increase the current cash flow available to shareholders going forward. We continue to believe that there is significant underlying embedded value in KFN shares, not only in terms of long-term book value upside, but also in terms of the ability, based on the company's irreproducible liability structure, to take advantage of opportunities in corporate credit to create a powerful and consistently growing earnings stream over time."

To see more analyst ratings on KFN Click Here.

KKR Financial Corp., a real estate investment trust and specialty finance company, invests in various asset classes in the United States.

Goldman Sachs removed GameStop Corp. (NYSE: GME) from their Conviction Buy List, but maintains a Buy rating, to reflect less upside to near-term earnings, after the company reaffirmed its original guidance without narrowing or increasing the range.

The firm trimmed their Q3 EPS estimates by 2 cents, to $0.32, which is now 1 cent below the high end. The firm's 2010 EPS estimates were lowered from $2.91 to $2.89, and 2011 from $2.82 to $2.80.

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FBR Capital reiterates an Outperform on Diana Shipping (NYSE: DSX), price target $18.

FBR analyst says, "Vessel acquisitions are on the horizon as the company seeks to acquire during the downturn. Diana Shipping has enough liquidity to more than double its Capesize fleet, and an initial purchase could be as early as next month. We believe once acquisitions commence, DSX shares will appreciate as capital is put to work and fleet growth becomes more transparent. Consequently, we reiterate our Outperform rating and $18.00 price target based on 9.5x 2010 P/CF."
To see more analyst ratings on DSX Click Here.

Diana Shipping Inc., through its subsidiaries, provides shipping transportation services.

Susquehanna maintains a 'Positive' rating on The Gymboree Corp (Nasdaq: GYMB), raises price target from $55 to $58.

Susquehanna analyst says, "GYMB continues to manage the business well in what remains a challenging consumer environment. Despite a 3Q09 comp drop of 4%, management was once again able to generate improved profit performance, raising the earnings outlook for the quarter. Based on management's ability to appropriately align the business to drive consistent profitability, coupled with the upward revision in earnings guidance, we are increasing our EPS projections and raising our 12-month price objective to $58 from $55."

To see more analyst ratings on GYMB Click Here.

The Gymboree Corporation, a specialty retailer, operates stores offering apparel, accessories, and play programs for children in the United States, Canada, and Puerto Rico.

From Notable Calls

Merrill Lynch/BAM is out very positive on Palm (NASDAQ: PALM) this morning following meeting with management. Firm reiterates their Buy rating and $20 price target ahead of multiple catalysts.

Management meeting reinforces Merrill's positive views
Firm notes they had an encouraging meeting with Palm CEO Jon Rubinstein, CFO Doug Jeffries and IR head Teri Klein. Their key takeaway: despite increasing smartphone competition Palm can maintain differentiation and remains well positioned to launch its products with multiple new Tier-1 carriers in early 2010 by which time it should have a robust apps catalog. While they expect the stock to remain volatile, the recent selloff creates an interesting buying opportunity, in Merrill's opinion, for a company with an attractive platform, selling into a high growth market, and at a compelling valuation. (<1x CY10E EV/S, <11x PE on $1/sh in EPS power). Next catalyst is next week’s (15-Nov) launch of Palm's Pixi smartphone at Sprint.

Substantial channel expansion in 2010
The current pressure on Palm stock is due to limited distribution of its products at just 5 carriers led by relatively weak Sprint. However they expect this situation to change substantially in early 2010 as several new tier 1 carriers (including VZ) launch Palm's smartphones. This channel expansion supports their expectations for nearly 80% HoH ramp in 2HFY10 sales that management still seems comfortable with, in Merrill's view. They note that in the past Palm has sold products via 100 carriers.

All about the ecosystem
While Palm has a breakthrough operating system, its ~350 apps catalog pales in comparison to multiple thousand apps of RIM, Android and Apple. However Palm is adding 50-100 new apps to its catalog (still in beta) every week, and they expect new e-commerce features and mid-December formal opening of the apps store to all developers. Merrill highlights here a new capability that Palm is building that will enable customers to download apps by just clicking on a web URL (as opposed to going to an app store). They believe this will dramatically improve discovery of apps and attract attention from developers. They also note new tools that will let developers integrate apps with other device functions such as the calendar. Palm also recently hired few people from Mozilla to further its apps effort.

Merrill likes Palm's new Pixi
The firm had a chance to play with Palm's new Pixi smartphone that Sprint will launch this weekend (for $99 retail) along with new advertising campaign. Pixi retains all the cool features of Palm's webOS and user interface but in a smaller, cheaper and lighter package. Despite the small size the keyboard was surprisingly easy to use. They expect the product to target a younger demographic compared to the power powerful and fully featured Pre product.

Strong balance sheet for investing in marketing campaigns
With its recent secondary offering Palm now has over $570mn to co-invest with carriers in marketing programs and accelerate R&D of new products and applications. While cash burn could persist for another 1-2 quarters they believe the company has the required resources to execute on its current business plan.

Notablecalls: First of all, I have and continue to be skeptical of PALM on the long-term (see the archives).

Yet, with the stock down 40% from its recent highs in just over a month, it may be due for a bounce. Here's why:

- As Merrill highlights, PALM is going to add several new tier-1 carriers like Verizon over the coming months. This will help sales.

- Palm is set to launch their new Pixi smartphone this weekend at Sprint. Reduced features at a reduced price seems one for the kids. With a new ad campaign it will likely help sales & feed the hype.

- PALM's short interest stands at over 30%.

- The secondary overhang is gone. Palm is flush with cash (to burn) and will likely stay off the market for at least couple of years.

- Finally, there's the ever present chance of a takeover.

So, a beaten down stock, with catalysts and hefty short interest.

I think you can catch a nice 50c-1pt bounce in PALM as soon as today, putting the $11.50-12.00 range in play.

For more calls go to http://notablecalls.blogspot.com/