Procter & Gamble (PG
), Clorox (CLX
), Dial (DL
): Downgrades to 3 STARS (hold) from 4 STARS (accumulate)
Analyst: Howard Choe
Coupled with sector rotation out of defensive stocks, full valuation and the devaluation of the Argentine peso currency is likely drag on these stocks near term. While widespread contagion in Latin America is not believed likely, S&P believes fears of residual pressures on regional currencies will persist. S&P is maintaining opinions on Avon (AVP
), which have a 3 STARS (hold) ranking, and Kimberly-Clark (KMB
), which has a 2 STARS (avoid) ranking.
Lucent Technologies: Maintains 3 STARS (hold)
Analyst: Ari Bensinger
The technology giant named Eastman Kodak's president &
COO Patricia Russo as new CEO, replacing Henry Schacht
who has been interim CEO since October 2000. Russo
worked at AT&T/Lucent for 20 years before joining
Kodak in April 2001. Being a former CEO of the service
provider division, Russo understands industry dynamics
and company culture. Given Lucent's refocus on top
service providers, S&P sees Russo as a good fit. S&P
also believes Lucent, with its large customer base, is
well positioned to recover during the next spending
upturn. At 1.5 times S&P's fiscal 2002 (Sept.) sales
estimate, in line with peers, Lucent is fairly valued.
Great Atlantic & Pacfific (): Maintains 3 STARS
Analyst: Joseph Agnese
The grocery chain posted November quarter EPS of $0.08 before
charges, vs. a loss of $0.38, $0.01 above Street.
Total sales were up 4.0%, comparable-store sales rose
3.3%. The results exclude $2.49 , in charges related
to a previously announced asset disposition program.
Great S&P is on schedule with the majority of 39
stores expected to be closed by the end of fiscal 2002
(Feb.). The program should result in annual EPS
benefit of about $0.35. S&P expects continuing costs
associated with supply-chain strategic initiatives of
about $0.35 per share in Q4, and is Keeping the fiscal
2002 estimate of $0.02 loss per share. The 'hold'
ranking is based on turnaround progress.
Eastman Kodak (EK
): Maintains 3 STARS (hold)
Analyst: Richard Stice
Patricia Russo is resigning after only nine months to
become CEO of Lucent Technologies. Chairman and CEO
Daniel Carp will re-assume roles as the search begins
for a replacement. The news is disappointing,
particularly as Kodak deals with slumping demand,
realignment of business units. However, S&P believes
Mr. Carp is more than capable of handling the role on
an interim basis. While an announcement may delay
completion of Kodak's turnaround plan, with shares
trading at discount to peers and the broader market on
a price-earnings basis, Kodak is okay to hold.