S&P Stock Picks and Pans

S&P Picks and Pans: Sirius XM Radio, Wal-Mart, Ameren, Medtronic, Coldwater Creek


S&P MAINTAINS HOLD OPINION ON SHARES OF SIRIUS XM RADIO (SIRI; .10):

SIRI enters pact for two-phase $530 million investment by Liberty Media (LMDIA; 19, NR), for 12.5 million preferred shares convertible into 40% of SIRI. LMDIA's Malone and Maffei would join SIRI board. SIRI would skirt bankruptcy on $175 million notes due today. Still, with 15% coupon on phase-one $250 million notes due 2012, we see continued tenuous credit, ahead of $350 million of revolver/term loan due in May, and $228 million of notes due December. LMDIA's pact seems motivated by its DirecTV (DTV; 23.24) designs, edging Charlie Ergen-controlled DISH (DISH; 13.58), though conceivably resurfacing in battle for control. -T. Amobi - CPA, CFA

S&P REITERATES STRONG BUY RECOMMENDATION ON SHARES OF WAL-MART STORES (WMT; 48.18):

WMT reports January-quarter operating EPS of $1.03, vs. $1.05, $0.05 ahead of our expectation. Results benefited from comparable-store sales growth of 2.8% (excluding fuel) and a lower tax rate, despite an unfavorable forex impact. We believe WMT is optimally positioned to gain significant market share in the weak economic environment through its low-priced staples and basics discretionary offerings. Due to increased forex pressures, we are keeping our fiscal year 2010 (January) operating EPS estimate of $3.55. We are reducing our 12-month target price by $1 to $57 on comparative and p-e analyses. -J. Agnese

S&P DOWNGRADES RECOMMENDATION ON SHARES OF AMEREN CORP TO HOLD FROM BUY (AEE; 27.17):

Shares down about 15% today following AEE's announcement that it has cut its dividend by 39%, effectively reducing the yield from 7.9% at Friday's close to 5.7% at the shares' current price. Fourth quarter operating EPS of $0.45, vs. $0.60, is $0.09 above our estimate. Both fourth quarter and full-year 2008 operating EPS, $2.95 vs. $3.30, were hurt by higher fuel and operating costs. We are reducing our 2009 EPS estimate by $0.23 to $2.95 to reflect the impact of a weak economy and power market. We are also cutting our 12-month target price by $8 to $29, a discount-to-peers p-e of 9.8 times our 2009 estimate. -J. McCann

S&P RAISES OPINION ON MEDTRONIC SHARES TO BUY FROM HOLD (MDT; 35.32):

January-quarter operating EPS of $0.71, vs. $0.63, is $0.01 above our recently lowered estimate, aided by forex hedging gains and lower tax rate than we expected. Sales rose just 3% from year-ago, but 6% ex-currency, in line with our estimate. We think MDT performed well in competitive ICD category and believe investors will gravitate toward shares because of its product line diversity and ability to sustain high levels of free cash flow. We raise fiscal year 2009 (April) EPS estimate by $0.06 to $2.91, but keep fiscal year 2010 at $3.20. On a forward p-e in line with peers, we boost our target price $8 to $42. -R. Gold

S&P MAINTAINS HOLD OPINION ON SHARES OF COLDWATER CREEK (CWTR; 2.28):

CWTR guides for January-quarter per share loss of $0.23-$0.25 vs. year-ago loss of $0.19. We see continued weakness in retail environment weighing on CWTR in 2009 as consumers shop less and often wait for markdowns to buy. We expect CTWR to focus on controlling expenses and strengthening its balance sheet, as well as working to enhance the customer experience at its stores. We widen our fiscal year 2009 (January) loss estimate to $0.33 per share from a loss of $0.11, and fiscal year 2010's to a $0.18 loss from $0.04 EPS. We cut our 12-month price target by $1 to $3, 10.7 times our fiscal year 2011 EPS estimate of $0.28. -P. Wang

All of the views expressed in this research report accurately reflect the research analyst's personal views regarding any and all of the subject securities or issuers. No part of analyst compensation was, is or will be, directly or indirectly related to the specific recommendations or views expressed in this research report. Standard & Poor's Regulatory Disclosure

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