Boston Scientific (BSX): Reiterates 3 STARS (hold)
Analyst: Robert Gold
Following a brief inspection, the FDA found no manufacturing problems at the company's plant in Galway, Ireland. The facility was one of two plants used to make Taxus drug-coated stents, and the FDA previously cleared Boston Scientific's Minnesota-based facility. We believe the news will remove some of the cloud over the stock related to drug-coated stents, but think the company's valuation will remain discounted to our large-cap cardiovascular coverage group, pending visibility on growth drivers beyond 2006. We are raising our 12-month target price to $44 from $36, or 20 times our 2005 earnings per share estimate of $2.20.
JetBlue Airways (JBLU): Reiterates 3 STARS (hold)
Analyst: Jim Corridore
The company says that due to the effects of the two Florida hurricanes, a weak yield environment, high fuel prices, and weak bookings, it sees third-quarter EPS significantly lower than previously expected. We are cutting our EPS estimate for 2004 to 65 cents from 75 cents and our forecast for 2005 to 90 cents from $1.00. Trading at 26 times times our 2005 EPS estimate, the shares are valued above other discount peers even as JetBlue faces competitive pressures and likely continuing margin contraction. However, given our belief that the company will continue to grow rapidly and profitably, we would hold the shares.
Aqua America (WTR): Reiterates 4 STARS (accumulate)
Analyst: Stewart Scharf
We expect the company to further expand via acquisitions and rate hikes, while operating and maintenance expense falls by 100 to 150 basis points, from nearly 42% of revenues, on synergies within four years. We see annual dividend hikes; the December, 2004, dividend was increased by 8%. Aqua currently yields 2.4%, compared to 1.2% for S&P's MidCap 400. At 21 times our 95-cent 2005 EPS estimate, the shares trade at a modest premium to peers. We believe the stock deserves a forward p-e above historical averages, and are applying a p-e of 26 to our 2005 EPS projection, thereby raising our 12-month target price to $25 from $23.