Markets & Finance

S&P Keeps Buy on Altria Shares


Goldman Sachs(GS) : Reiterates 5 STARS (strong buy)

Analyst: Robert Hansen, CFA

Goldman posted November-quarter EPS of $3.35 vs. $2.36, well above our $3.00 estimate. The firm benefited from higher financial advisory, equity underwriting, asset management, and

trading and principal investment revenues. We see these trends

continuing into fiscal 2006 (ending November) and think Goldman can grow earnings despite rising interest rates. We are raising our fiscal 2006 EPS estimate to $12.00 from $11.40. Our 12-month target price goes to $168 from $160, or 14 times our fiscal2006 EPS estimate and above peers. Trading at under 11 times our fiscal 2006 EPS estimate, we view the valuation on Goldman shares as very attractive.

Altria Group(MO): Reiterates 4 STARS (buy)

Analyst: Anishka Clarke

On Dec. 15, the Illinois Supreme Court dismissed an appeal in

the $10 billion Price case, ruling Altria did not defraud the public about the health risk of its cigarettes by labeling them "light," since regulators specifically authorized the company to make such a classification. We

think this ruling reduces the company's cash flow risk and moves it closer to a split up into Kraft, an international tobacco company, and a domestic tobacco company. Despite a likely U.S. Supreme Court appeal, we are raising our target price to $85 from $82 on lower risk in our

discounted cash-flow and p-e models. Altria's dividend is yielding 4.1%.

Abgenix (ABGX) : Cuts to 3 STARS (hold) from 4 STARS (buy)

Analyst: Frank DiLorenzo, CFA

Abgenix agreed to be acquired by Amgen (AMGN) for $22.50 cash/share plus assumption of Abgenix debt. We view the terms as good for Abgenix shareholders. Strategically, we believe Abgenix is a natural fit with Amgen, due to the companies' 50/50 partnership for the anti-cancer candidate panitumumab. We see approval by the end of 2006 of panitumumab in patients with colorectal cancer who failed prior chemotherapy treatment. Amgen's denosumab osteoporosis candidate was also derived from Abgenix technology. We see the deal completed the first quarter of 2006, pending approvals. Our target price rises by $1 to $22.

Amgen (AMGN) : Reiterates 5 STARS (strong buy)

Analyst: Frank DiLorenzo, CFA

Amgen agrees to buy Abgenix (ABGX) for $22.50 cash/share. The companies are 50/50 partners in panitumumab antibody for colorectal cancer; Amgen will get full rights and no longer be obligated to pay royalties on denosumab. We see completion of deal by the first quarter of 2006, pending approvals. We like the deal and see long-term upside to EPS and growth by 2008 as a result. Our 2006 EPS estimate falls to $3.48 from $3.65, and 2007's to $3.84 from $3.96 due to the inclusion of expected stock option expense. We expect the planned Abgenix deal to be accretive to EPS in 2008. Our 12-month target price stays $93.

General Growth Properties (GGP): Cuts to 4 STARS (buy) from 5 STARS (strong buy)

Analyst: Robert McMillan

Shares have risen over 11% in the past two months, driven in part, we believe, by expectations that General Growth Properties will continue to post solid results and by the general expectations that the cycle of interest rate hikes by the Federal Reserve is nearing an end. Although we expect General Growth Properties operating trends to continue to improve amid an expanding economy and healthy retail conditions, which should produce good occupancy and rent growth, we would be less aggressive now in acquiring shares. However, we are raising our 12-month target price by $3 to $52.

CBL & Assoc. (CBL): Cuts to 4 STARS (buy) from 5 STARS (strong buy)

Analyst: Robert McMillan

Shares of CBL have risen almost 10% in the past two months, partly driven, in our opinion, by expectations that CBL will continue to post solid results and by the general expectation that the cycle of interest rate increases by the Federal Reserve is nearing an end. We expect operating trends for the company to continue to improve due to an expanding economy and healthy retail conditions, which we think should result in good occupancy levels and rent growth; however, with less upside potential to our 12-month target price of $44, we lower our opinion to buy.


Ebola Rising
LIMITED-TIME OFFER SUBSCRIBE NOW

Sponsored Financial Commentaries

Sponsored Links

Buy a link now!

 
blog comments powered by Disqus