Taking stock: Analyst says don't count on SunTrust buyout soon

Also: Nissan shares seen flat and O'Charley's is no longer on sale

Email | Print By Geert De Lombaerde

Parts of the Wall Street chatter machine have sprung to life since JP Morgan CEO Jamie Dimon said he still wants to grow his retail business and Bank of America CEO Ken Lewis talked of more consolidation “leading to stronger, more diverse and more efficient institutions.”

Dimon’s comments led to people singling out SunTrust Banks, Nashville No. 3, as a potential JP Morgan partner. Such a deal – or any involving a large Southeast bank – would likely kick off another round of mergers and buyouts that would put into play companies such as Regions Financial (Ticker: RF) and bring to the table buyers such as Wells Fargo. (Ticker: WFC)

But in a brief – and slightly cynical – report titled “If the Board can’t sell KO, how do they sell STI?” Jeff Davis of FTN Midwest Securities this morning all but called talk of a JP Morgan-SunTrust deal a waste of time given the current SunTrust board's unwillingness to sell and the banking sector’s wrestling match with a painful credit downturn.

Davis, who has a ‘neutral’ rating on SunTrust shares (Ticker: STI) and a price target less than 10 percent above its current price of about $54, says a sale to JP Morgan (Ticker: JPM) would be “interesting and perhaps logical.”

But he points to the SunTrust board’s work on a complex transaction that would allow its large and long-standing stake in Coca-Cola (Ticker: KO) to count as part of its regulatory capital without having to sell the shares. Such maneuvering, he says, indicates the board appears unlikely to seriously consider more drastic moves such as a sale, even though the bank’s shares have fallen from more than $90 a year ago.

“From a longer-term perspective, investors are right to incorporate an acquisition value for STI into their investment thesis,” Davis wrote.

But until then? Look elsewhere for M&A drama.

Zacks: Nissan shares going nowhere

Zacks Equity Research analyst Paul Raman says GT 2012, Nissan’s five-year growth plan, will face strong headwinds from rising commodity prices and costs associated with the launch of a raft of new models.

Raman, who rates the ADRs of Nissan (Ticker: NSANY) a ‘hold’ and has an $18 target on them, also said the rolling out of new models means the company may have to step up its incentive programs.

Shares of Nissan are down more than 4 percent today and about 15 percent in 2008.

Firm says don’t sell O’Charley’s any more

TheStreet.com Ratings has upgraded shares of O’Charley’s from ‘sell’ to ‘hold.’ The firm didn’t give details of its move, which comes as shares of the restaurant company (Ticker: CHUX) have traded in a $10-$12 range for most of the past three months – even though it recently reported a 41-percent drop operating profits and said it will trim its expansion plans.

In late Wednesday trading, O’Charley’s was down more than 3 percent at $10.80. Year to date, the stock is down about 28 percent.