Markets & Finance

S&P PIcks and Pans: Bristol-Myers, Countrywide, Take-Two


Analyst opinions on stocks making headlines Tuesday

S&P REITERATES STRONG BUY OPINION ON SHARES OF BRISTOL-MYERS SQUIBB

From Standard & Poor's Equity Research

BMY; $28.37

Bristol-Myers and Imclone Systems (IMCL; $45.48) announce results from a Phase III trial of Erbitux in combination with platinum-based chemotherapy that demonstrated improved survival for lung cancer patients. We believe Bristol-Myers has a formidable oncology pipeline, which we think could generate over $1 billion in sales by 2010. Separately, Bristol-Myers reaffirmed its previous EPS guidance of $1.35-$1.45 for 2007, and $1.60-$1.70 for 2008. We reiterate our 12-month target of $38, which reflects our $33 estimate of the company's present businesses and R&D pipeline, plus a takeover premium of $5. Its dividend yields 3.9%. /H. Saftlas

S&P MAINTAINS SELL OPINION ON SHARES OF COUNTRYWIDE FINANCIAL

CFC; $17.21

According to an unconfirmed report by Reuters, Countrywide is seeking another investor to inject capital. We believe the report makes sense, based on our view that Countrywide will likely need additional funding while it works to pare down loans, lower expenses and switch origination to its thrift operation. We note that Countrywide recently received $2 billion from Bank of America (BAC; $48.96) in exchange for preferred securities that are convertible to common stock at $18 a share. Our 12-month target price remains $16, 9 times our 2008 estimate of $1.78, a discount to historical levels. /S. Plesser

S&P MAINTAINS HOLD RECOMMENDATION ON TAKE-TWO INTERACTIVE

TTWO; $15.75

The company's July-quarter operating loss per share of 81 cents vs. a year-earlier loss of $1.29 is 16 cents wider than our estimate. Revenues declined 14% to $206 million, reflecting a lack of major title releases in the quarter. However, Take-Two plans to release Manhunt 2 and Table Tennis for Wii in the October quarter and Grand Theft Auto IV in the April quarter. We expect operating margins will expand on more hit games developed internally and lower operating expenses. We are raising our fiscal 2008 (ending October) EPS estimate to 76 cents from a loss of 37 cents, and our discouned cash-flow-based 12-month target price to $18 from $16 based on our view of higher revenues and operating margins. /J. Yin

S&P MAINTAINS HOLD RECOMMENDATION ON SHARES OF SHARPER IMAGE

SHRP; $4.02

The company's July-quarter per-share loss of $1.36 vs. a loss 98 cents is 40 cents wider than our estimate and 43 cents wider than Street's. Revenue, down 25%, was in line but expenses were higher than our forecast. We think Sharper Image made progress in clearing out inventories, which were down 19%, but this pressured product margins. We are widening our fiscal 2008 (ending January) loss per share estimate by 40 cents to a loss of $3.00 on higher expenses and will review this estimate following Sharper Image's earnings call tomorrow. We are keeping our 12-month target price of $10 on these highly speculative and volatile shares. /E. Kwon-CFA


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