Dow Jones (DJ): Downgrades to 1 STAR (sell) from 2 STARS (avoid)
Analyst: William Donald
Dow Jones reported $0.25 second quarter earnings per share, before "special items" that included a $0.07 restructuring charge, vs. $0.52. Revenue dropped 13.9%. The company is benefiting from improving trends in real estate and color advertising, as well as ongoing cost reductions. But general, technology and financial advertising remains weak. A protracted recovery is likely. S&P has lowered its 2002 earnings per share estimate by $0.07, to $1.22, and is trimming the 2003 estimate by $0.10, to $1.65. Dow Jones remains richly valued at 36 times the 2002 estimate and 27 times 2003's estimate.
Commerce Bancorp (CBH): Maintains 4 STARS (accumulate)
Analyst: Evan Momios
The bank continues to grow faster than competition, and posted second quarter earnings per share of $0.49, $0.02 above the Street's average. Total revenues rose 40%, loans rose 28%, and core deposits were up 49% with same-unit deposits up 30%. Commerce Bank's net interest margin was 4.75%, slightly below the first quarter's 4.85%. Credit quality still is strong but the company conservatively raised its reserves. Commerce Bank opened two new branches in New York City in the second quarter and plans four more openings in 2002. S&P is raising the 2002 EPS estimate by $0.06, to $1.96. With a price/earnings estimate of 1.1 times the company's projected five-year earnings growth of 20%, Commerce Bank is attractive.
IDEC Pharmaceuticals (IDPH): Upgrades to 4 STARS (accumulate) from 3 STARS (hold)
Analyst: Frank DiLorenzo
The drug maker's second quarter U.S. Rituxan sales of $257 million beat S&P's $246 million projection, while initial Zevalin sales of $3.3 million were $1.2 million above projections. IDEC's estimated earnings per share of $0.20 in the second quarter is a penny above S&P's estimate. Rituxan sales continue to grow solidly, up 43% from the prior year period. IDEC will report results on July 17. S&P sees 2002 EPS at $0.85 and 2003's at $1.17. Using realistic numbers in a net present value analysis of IDEC's products and pipeline, S&P believes shares are worth over $40.