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S&P REITERATES STRONG BUY OPINION ON SHARES OF WAL-MART STORES (WMT; 51.02):
Excluding fuel, December comp-store sales grew 1.7%, below our 2.6% estimate. Sam's Club growth of 0.1% was significantly below our 3.5% forecast, as small-business demand declined. Core U.S. business comps grew 1.9% on benefits from market-share gains, as consumers traded down in the adverse economic environment, but missed our 2.5% estimate. We are cutting our fiscal year 2009 (January) operating EPS estimate by $0.08 to $3.36 and fiscal year 2010's by $0.13 to $3.55, to reflect unfavorable forex and weakening warehouse club demand. We are cutting our target price by $3 to $58 on DCF and p-e analyses. -J. Agnese
S&P REITERATES HOLD OPINION ON SHARES OF SATYAM COMPUTER SERVICES (SAY; 9.35):
SAY ADSs have not traded since Jan. 6 market close. The company is seeking to maintain business continuity after allegations of massive fraud by its former chairman. It is also attempting to ascertain actual financial position, correcting for overstated assets. We note both its board and independent auditor failed to recognize the inflated results. We believe it will be very difficult for SAY to recover from this situation, and we expect both clients and employees to shift away from the company in the near term. Our earnings estimates and target price are under review. -D. Cathers
S&P KEEPS HOLD OPINION ON INTUITIVE SURGICAL SHARES (ISRG; 117.88):
With widespread and expanding pressures on medical equipment vendors amid sharply reduced hospital capex budgets, ISRG sees fourth quarter revenues of $232 million, below our $258 million estimate, and 2009 sales of $1.0 billion, missing our $1.1 billion estimate. We think 2009 guidance will be difficult to achieve as hospital demand for robotic surgical equipment ebbs, and we now see 2009 revenue of about $960 million, which assumes lower system sales. We reduce 2008 EPS estimate $0.13 to $5.17, 2009's by $0.70 to $5.70, and our target price by $44 to $110 on relative valuation metrics, incorporating a modest takeover premium. -R. Gold
S&P REITERATES HOLD OPINION ON WYETH SHARES (WYE; 38.22):
Dutch vaccine producer Crucell (CRXL; 21.86) confirms talks on being acquired by WYE. We think CRXL's growing vaccine franchise, including for pediatric diseases, flu and hepatitis, is among the best in the European biotech vaccine market. While relatively small, we believe the company would be a good fit with WYE's vaccine unit. Based on an unconfirmed WSJ report of a discussed price of $1.35 billion, we think a potential deal, at roughly 5 times sales, is attractive relative to similar recent deals. Our $40 target for WYE applies peer-level 10.8 times our 2009 EPS estimate Dividend yields 3.2%. -H. Saftlas
S&P KEEPS HOLD OPINION ON SHARES OF CITIGROUP (C; 7.21):
An unconfirmed story in the Wall Street Journal says that Citigroup, along with other lenders, is negotiating with lawmakers on legislation that would allow judges to reset mortgage payment terms for individuals in bankruptcy court. We think such a policy could help to stem home price declines by limiting new housing inventory generated by foreclosure. It could also indicate that lenders want to get ahead of the issue before a new administration forces more severe changes in the industry to help homeowners. We expect such a bill could find strong support in the new Congress. -M. Albrecht
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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