Amazon.com (AMZN

): Downgrades to 2 STARS (sell) from 3 STARS (hold)

Analyst: Jason Asaeda

While we continue to have a favorable view of Amazon.com's ever-expanding product offerings from a diverse mix of retailers, we expect still-strong sales growth to moderate this year, reflecting a maturing business and increasing competition. We also expect operating margins to narrow in 2005 because of the company's heavy discounting and free shipping promotions, ongoing investments in technology and content development, and option expensing. With the shares now trading above our 12-month target price of $33, our recommendation is sell.

McDonald's Corp. (MCD

): Reiterates 5 STARS (strong buy)

Analyst: Dennis Milton

Systemwide sales grew 6.7% in April, due primarily to same-store sales growth of 2.8%, year to year, and a weaker U.S. dollar. Same-store sales rose 4.7% in the U.S. and 1.6% in the Asia-Pacific/Middle East/Africa region, but fell 0.7% in Europe. We view these results as strong, given difficult year-ago same-store sales comparisons (13.5% in the U.S., 10.5% overall). We are maintaining our 2005 earnings per share estimate of $1.96, and our 12-month target price of $38. At 15 times our 2005 earnings per share estimate, shares are at a slight discount to peers despite McDonald's strong sales momentum.

AmeriTrade Holding (AMTD

): Downgrades to 3 STARS (hold) from 4 STARS (buy)

Analyst: Robert Hansen, CFA

Shares are up today following unconfirmed Wall Street Journal and other reports of potential buyout offer by E*Trade. We think AmeriTrade would make an attractive acquisition candidate and that significant synergies could be achieved. Also, we do not think management control issues will present a problem for an acquirer. We still see fiscal 2005 (ending September) earnings per share at 80 cents, but are raising our 12-month target price to $14 from $13, or nearly 18 times that estimate. Our downgrade reflects our view that a bidding war is not likely, given that we see only a limited number of potential suitors.

Duke Energy (DUK

): Reiterates 5 STARS (strong buy)

Analyst: Yogeesh Wagle

After Duke Energy's conference call about its proposed acquisition of Cinergy, we still view Duke Energy shares favorably. We think the transaction would partly fulfill Duke's need to improve profitability of its North American power generation fleet. In particular, we think Duke's underutilized Midwest gas-fired plants would benefit from sales to Cinergy's electric utilities as they face growing load and emission control challenges. We think the combined entity would have an improved risk profile, with over 85% of pro forma operating income derived from regulated electric and gas operations.

Cinergy Corp. (CIN

): Reiterates 4 STARS (buy)

Analyst: Justin McCann

Shares are up about 6% this morning after Cinergy agrees to merge with Duke Energy, pending approvals. In an all-stock transaction, holders would receive 1.56 shares of Duke Energy for each Cinergy share, owning about 24% of the new Duke Energy Corp. We are raising our target price for Cinergy by $5 to $48. Based on these terms, Cinergy shares would be worth about $45 at Duke Energy's current price, but could be worth $53 if Duke Energy were to reach S&P's $34 target price. Duke Energy plans to hike its dividend to $1.24 per share, implying a yield of 4.3%, just slightly below Cinergy's current yield of 4.5%.

Research In Motion (RIMM

): Reiterates 5 STARS (strong buy)

Analyst: Kenneth Leon, CPA

RIMM reached 3 million BlackBerry subscribers using its wireless platform, and added 1 million in the last six months. The firm said it is on track to reach its 560,000 to 590,000 subscriber adds target in its May-quarter. We expect net sales to grow 50% to $2 billion in fiscal 2006 (ending February), with 2.5 million net adds, finishing fiscal 2006 with 5 million users. While the media has spotlighted the company's potential competitive threats from Microsoft and palmOne, we consider BlackBerry to be well placed with enterprise firms and carriers in developed and emerging markets. Our 12-month target price is $84.

Credit Suisse Group (CSR

): Maintains 4 STARS (buy)

Analyst: Derek Chambers

Credit Suisse Group posted first-quarter net profits of $1.58 billion (1.91 billion swiss francs), vs. $1.54 billion (1.86 billion swiss francs), 22% ahead of our forecast. Results were aided by a revaluation of OTC derivatives and disposals of legacy private equity investments. Underlying revenues were flat, but expenses fell due to lower incentive and non-compensation costs. Due to nonrecurring first-quarter gains and forex effects, we are raising our 2005 earnings per ADS estimate by 14 cents to $4.28, but cutting 2006's by a penny to $4.45. We are lowering our target price by $1 to $47, 10.6 times our 2006 estimate, a slight premium to European banks but a discount to the closest competitor UBS.

Home Depot (HD

): Reiterates 4 STARS (buy)

Analyst: Marilyn Souers

An unconfirmed report in London's Financial Mail said that Home Depot was in talks to acquire Britain's Kingfisher. According to the article, Home Depot was said to be enthusiastic about Kingfisher's operations in China and the U.K., but concerned about its French business. We view a potential acquisition of Kingfisher positively, as it would accelerate Home Depot's planned foray into China as well as establish a European presence. In separate news, Home Depot filed a $5 billion debt shelf registration, which the company says will be used for debt repayment, acquisitions and working capital needs.

Kyocera Corp. (KYO

): Reiterates 3 STARS (hold)

Analyst: Megan Graham-Hackett

Kyocera announced that as part of restructuring efforts at its mobile phone business, it plans to outsource the manufacture and delivery of its products, and to sell certain manufacturing equipment and inventory to Flextronics International. We anticipated such a move, which the company says is aimed at improving its focus in its wireless business and profitability. KYO has already started to outsource service and repair operations. We still see fiscal 2006 (ending March) earnings per ADR of $4.00. Our target price remains $78, based on a p-e multiple of 19.5 times our fiscal 2006 estimate.