): Downgrades to 3 STARS (hold) from 5 STARS (buy)
Analyst: Robert Gold, Frank DiLorenzo
The company halted clinical trials of its antibody IDEC-131 in order to evaluate its safety profile. The compound is being studied for psoriasis, Crohn's disease, multiple sclerosis and the blood condition ITC. Idec will work with the FDA to see whether the compound played a role in the development of dangerous blood clots. Idec also says Medicare will provide a "pass through" payment for Zevalin beginning in October 2002, later than S&P had hoped. S&P is placing its 2002 and 2003 estimates under review, saying it's hard to identify catalysts for outperformance.
): Reiterates 5 STARS (buy)
Analyst: Phillip Seligman
The company upped 2002 EPS guidance by $0.30 to $4.30. The ruidance was raised $0.15 to $4.00 in late April. This reflects increased overall medical membership growth: excluding acquisitions, the company now sees high single digit growth vs. 5%-7% previously. This is Impressive, given the economic environment and competition. With higher growth, S&P sees the general and administrative ratio declining over rest of 2002 from the first quarter's 14%. S&P is upping the 2002 estimate to $4.30, in line with estimate, but wouldn't be surprised if the comapny upped its 2002 guidance again. S&P says buy the shares at 18.1 times S&P's 2002 estimate vs. the 15%-plus sustainable long-term EPS growth, aided by future acquisitions.
Advent Software (ADVS
): Downgrades to 3 STARS (hold) from 2 STARS (avoid)
Analyst: Michael Santicchia
In Monday's conference call Advent announced it will start offering software on a three-year license, in addition to a perpetual license. While the term license provides recurring revenues, it decreases near-term revenue and earnings visibility. S&P is cutting its 2002 EPS estimate to $1.07 from $1.30 and trimming 2003's to $1.58 from $1.74. S&P continues to believe Advent's products lead the investment management market, but expects the share price to sharply correct from current levels to reflect lower growth and increased business risk.