Markets & Finance

S&P Picks and Pans: FedEx, Nike, Credit Suisse, Abbott Labs, Starbucks


Analysts' opinions on stocks in the news Thursday

From Standard & Poor's Equity ResearchS&P REITERATES STRONG BUY OPINION ON SHARES OF FEDEX (FDX; 86.23):

February-quarter EPS of $1.26, vs. $1.35, misses our estimate by $0.02. FDX guides lower for fiscal year 2008 (May); sees limited fiscal year 2009 EPS gains. The U.S. economy and oil are drags on demand and international growth has slowed. We lower our fiscal year 2008 and fiscal year 2009 EPS estimates to $6.18 and $6.65, from $6.55 and $7.45. We drop our target price to $107 from $140, 16 times fiscal year 2009 EPS estimate, below our multiple for United Parcel (UPS; 70.60) and at the low end of its 5-year historical p-e range. We think the current price discounts much of the economic risk we foresee, and we see any positive economic news helping stock price. -J.Corridore

S&P DOWNGRADES OPINION ON ADSS OF CREDIT SUISSE TO HOLD FROM BUY (CS; 49.85):

Although CS's U.S. subprime and other residential mortgage net exposures remain lower than those of some competitors, in our view, the leveraged loan and commercial mortgage exposures write-downs for March that CS announced today leave it indicating that it will post a loss in the first quarter. Through the end of February, CS had indicated that the first quarter would be profitable. We think today's announcement undermines our prior view that CS's investment bank had returned to more steady performance. We are therefore reducing our discounted cash flow (DCF)-based 12-month target price by 5 to 54, and our recommendation to hold. -D. Chambers

S&P MAINTAINS BUY RECOMMENDATION ON SHARES OF NIKE (NKE; 65.68):

Strong February-quarter EPS of $0.92, vs. $0.68, beats our $0.75 estimate on expanding margins, as costs fell on an improved supply chain and the SG&A expense ratio dropped. Lower effective tax rate and fewer shares added $0.03 combined, and the Starter sale added $0.04. NKE's U.S. footwear market share is 40%, up 7% on trailing 12-month basis. We see NKE maintaining strong global momentum in the next few years, and are raising our fiscal year 2008 (May) and fiscal year 2009 EPS estimates to $3.68 and $3.90, from $3.55 and $3.82. We are also lifting our target price to $78 from $71, 20 times our fiscal year 2009 EPS forecast. -M. Driscoll, CFA

S&P DOWNGRADES OPINION ON SHARES OF ABBOTT LABORATORIES TO BUY FROM STRONG BUY (ABT; 54.39):

ABT and Takeda Pharmaceutical will end their 50/50 joint venture in Tap Pharmaceutical, with ABT retaining rights to prostate cancer drug Lupron and receiving an undisclosed upfront cash payment and future cash payments estimated at $1.5 billion. Takeda will retain the heartburn drug Prevacid and the R&D staff, plus pipeline drugs. We think this transaction makes sense. However, we are lowering our 12-month target price by 8 to 63, to reflect a forward p-e and a p-e-to-growth closer to peers, and more modest 2008 appreciation expectations for pharma stocks in our coverage universe. -R. Gold

S&P MAINTAINS STRONG BUY OPINION ON SHARES OF STARBUCKS (SBUX; 17.73):

We think new product and service initiatives outlined by management at Wednesday's annual shareholders' meeting will shore up SBUX's long-term competitive position. However, we do see a weaker economy, as well as the costs associated with the above initiatives, affecting SBUX's near-term profitability. We are lowering our revenue growth projections for fiscal year 2008 (September) and fiscal year 2009 from 15% and 16%, to 14% and 14%. We are also cutting our fiscal year 2008 EPS estimate by $0.07 to $0.90, and fiscal year 2009's by $0.15 to $1.05. Based on our revised DCF analysis, we are cutting our target price by 4 to 27. -M.Basham


Best LBO Ever
LIMITED-TIME OFFER SUBSCRIBE NOW

Sponsored Financial Commentaries

Sponsored Links

Buy a link now!

 
blog comments powered by Disqus