S&P Keeps Buy on Intel

Plus: Analyst opinions on MGM Mirage, NYSE Euronext and more

From Standard & Poor's Equity Research

Intel (INTC): Reiterates 4 STARS (buy)

Analyst: Clyde Montevirgen

Intel enters into agreement with STMicroelectronics (STM) and private-equity firm Francisco Partners to create a flash memory company. Under the agreement, both chipmakers will sell their flash memory businesses to the venture. Intel will sell assets related to NOR flash memory, which is used in PDAs and cell phones, receiving $432 million cash and a 45.1% ownership stake. The transaction is expected to close in the second half of 2007, pending approvals. We have a favorable view of this news and think that the potential spinoff of Intel's struggling NOR memory business can improve its profitability.

MGM Mirage (MGM): Reiterates 3 STARS (hold)

Analyst: Raymond Mathis

Shares of MGM are sharply higher after majority owner Tracinda Corp. stated in an SEC filing that it intends to enter into negotiations with MGM to purchase the Bellagio Hotel and Casino and City Center properties. Tracinda also wants to pursue strategic alternatives with respect to its 56% stake in MGM, including the potential restructuring of the remainder of the company. Applying a 15 mulitple of enterprise value to EBITDA multiple, a modest premium to the average seen in recent gaming transactions, we are raising our 12-month target price to $83.

Kongzhong Corp (KONG): Downgrades to 2 STARS (sell) from 5 STARS (strong buy)

Analyst: Jim Yin

Shares are expected to open sharply lower after KONG posts first-quarter earnings of 4 cents, vs. 24 cents, 4 cents below our view. Revenue fell 28%, reflecting the implementation of double confirmation policy. We see declining revenue and operating losses for the next several quarters due to possible changes in revenue sharing and its top customer offering competing services. We have a negative outlook on China's WVAS industry, which is plagued by hundreds of competitors and few concentrated customers. We reduce our 2007 earnings estimate to 2 cents from 30 cents, and our target price to $5.50 from $9.

Tele Norte Leste Participacoes ADS (TNE): Downgrades to 3 STARS (hold) from 4 STARS (buy)

Analyst: Ken Leon, CPA

Given the recent strength in the ADS price, now near our $19 12-month target price, and given the risks of a sales or earnings miss in 2007 and of volatility in the Brazil equity market, we would no longer add to positions. We forecast 7% revenue growth in 2007 driven by TNE's faster-growing wireless unit. And we believe the company is stabilizing its wireline business as it benefits from its faster-growing wireless unit. Applying a p-e of 10.4 to our 2007 earnings per ADS estimate, below peers, and with a 5.3% dividend yield, we would hold TNE ADSs.

NYSE Euronext (NYX): Maintains 4 STARS (buy)

Analyst: Jason Willey

The company's Euronext operations reported what we view as strong standalone results for first quarter, with revenues up 16%, year-over-year, to €310 million. Euronext's cash equities and derivatives businesses both saw record activity. We believe the results highlight our view that Euronext will be a positive contributor to the company's results in 2007, increasing its exposure to a number of attractive markets. While we see near-term risks associated with integrating Euronext and the NYSE, we anticipate the combined entity emerging diversified and well positioned for an increasingly global environment.

BJ's Wholesale Club (BJ): Reiterates 2 STARS (sell)

Analyst: Joseph Agnese

April-quarter operating EPS of 20 cents vs. 22 cents is in line with our estimate. Results were hurt by cold, rainy April weather, which impacted sales of wider-margin seasonal merchandise. We view the decision to slow growth of new club openings as positive, believing it will allow better focus on turning around existing clubs. On benefit we expect from ongoing merchandise initiatives, we are increasing our fiscal 2008 (ending January) EPS estimate by 10 cents to $1.60 and raising our 12-month target price $3 to $34 on enterprise value/EBITDA analysis. But above our 12-month target price, we would sell.