| Register/Subscribe Home |
|
|
ONLINE FEATURES
Book Reviews
BW Video
Columnists
Interactive Gallery
Newsletters
Past Covers
Philanthropy
Podcasts
Special Reports
BLOGS
The Auto Beat
Byte of the Apple
Europe Insight
Eye on Asia
Getting In
Investing Insights
The New Entrepreneur
NEXT: Innovation Tools & Trends
On Media
Technology at Work
The Tech Beat
Traveler's Check
TECHNOLOGY
Product Reviews
Tech Stats
Hands On
AUTOS
Home Page
Auto Reviews
Car Care & Safety
INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip FINANCE Investing: Europe Annual Reports Bloomberg BW50 SCOREBOARDS Hot Growth Companies: 2008 Mutual Funds Info Tech 100 B-SCHOOLS Undergrad Programs Rankings & Profiles | | SEPTEMBER 19, 2001  STOCK PICKS & PANS Still Avoid Boeing Also: analysts' opinions on Kraft and Americredit. Plus more...
Analyst: Michael Jaffe, Robert Friedman Already in the midst of drastic downturn, aviation industry has been savaged by last week's terrorist attacks, and this has caused most airlines to implement large staff cuts (up to 30,000) and major schedule reductions. Boeing now expects to deliver 400 aircraft in 2002 vs. the 510-520 previously forecast. S&P is putting the 2001 and 2002 EPS estimates under review for major reductions. Boeing is trading around its prior fair value calculation, but the far-ranging impact of last week's events will likely result in a decrease in S&P's fair value estimate. Kraft Foods (KFT ): Upgrades to 5 STARS (buy) from 3 STARS (hold) Analyst: Richard Joy The world's second largest food company should benefit from interest in defensive issues and a near-term shift towards in-home eating. Kraft's consistent and predictable operating profile is further enhanced by a weak dollar and lower interest costs. The Nabisco acquisition enhances Kraft's growth profile, and is leading to an expected five-year EPS growth rate above 14%. Given its dominant market positions and superior EPS growth, Kraft is attractive at 16 times the 2002 cash EPS estimate of $2.01, in addition to its large unwarranted discount to price-to-earnings multiple on the S&P 500 and comparable peers. The 12-month target is $38. Americredit Corporation (ACF ): Downgrades to 4 STARS (accumulate) from 5 STARS (buy) Analyst: Robert McMillan In the wake of last week's terrorist attacks and expected decreases in consumer confidence and spending, which should negatively impact car sales and loan originations, S&P believes it's prudent to be less aggressive in acquiring Americredit shares. The company has confirmed that it closed down operations last Tuesday, which will adversely affect results. S&P is reviewing its estimates. However, shares remain attractive at 7.9 times the fiscal 2002 (June) Street estimates of $3.81, given the 27% long-term growth rate forecasted by the Street. Aon Corp. (AOC ) and Marsh & McLennan Cos. (MMC ): Reiterates 4 STARS (accumulate) Analyst: Catherine Seifert Insurance brokers, with offices in the World Trade Center, suffered devastating personnel losses. But, both companies are well positioned to benefit from higher commercial lines and premium rates likely to result from the WTC disaster. S&P is trimming the 2001 EPS estimate for Aon to $0.30, to $2.00, and still sees $2.55 EPS in 2002. The six-to-12 month target price: $42. Marsh & McLennan's outlook is tempered by weak the Q3 and Q4 seen at it's Putnam unit. S&P is trimming the 2001 estimated EPS by $0.10, to $4.35, and cutting the 2002 estimate by $0.20, to $5.00. The six-to-12 month target price: $92-$95. Wal-Mart (WMT ): Reiterates 4 STARS (accumulate) Analyst: Karen Sack The stock traded higher Tuesday on heavy volume. On Monday, Wal-Mart said same-store sales rebounded over the weekend to a more normal 4% gain. Overall, September comparison sales could be up 4%-6%. S&P expects investors to favor companies with strong balance sheets and industry leadership. Wal-Mart's mix of food and basic commodity items, plus geographic diversity, bode well for continued EPS gains. Wal-Mart canceled its Oct. 2 and Oct. 3 annual analyst meeting, which will be replaced by a three-hour conference call. S&P expects it to be relatively upbeat, and is keeping the $1.51 fiscal 2002 (Jan.) and $1.74 fiscal 2003 EPS estimates. USA Networks (USAI ): Downgrades to 4 STARS (accumulate) from 5 STARS (buy) Analyst: Mark Basham, Thomas Graves S&P still views the company as a good long-term growth story, with opportunities to build cash flows from various cable television and Internet businesses. But S&P expects last week's tragic events to hurt the already soft advertising environment and lead to weakness in near-term consumer spending. Also, USA Network's pending acquisition of a majority equity interest in Internet travel busines Expedia Inc. may cause increased wariness among investors. Any advice, analysis, or recommendations contained in articles labeled "Advice from Standard & Poor's" reflect the views of Standard & Poor's, which operates separately from and independently of Business Week Online. It is possible that BWOL may from time to time publish information that is not consistent with advice, analysis or recommendations that are published by Standard & Poor's. Standard & Poor's and Business Week Online are each units of The McGraw-Hill Companies, Inc. Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | [an error occurred while processing this directive] |
 Copyright 2001, Bloomberg L.P.Terms of Use | Privacy Policy |
Printer-Friendly Version
