S&P MAINTAINS BUY OPINION ON SHARES OF JPMORGAN CHASE (JPM; 44.20):
JPM bolstered its loss allowance in the first quarter, and we believe it is well reserved for a further downturn in the housing market. Its ratio of allowance to loans is now an above-peer 2.2%. Although securities writedowns topped our expecation at $2.4 billion, we expect this figure to decline in coming quarters amid better pricing. We are maintaining our 2008 EPS estimate of $3.40, which does not include the likely benefits from the planned Bear Stearns (BSC) 10.02) acquisition. Our 12-month target price remains 51, which is 15 times our 2008 EPS estimate, a premium to peers. -S. Plesser
S&P MAINTAINS HOLD OPINION ON SHARES OF INTEL (INTC; 20.91):
Non-GAAP first quarter EPS of $0.31, vs. $0.23, is $0.01 below our model on lower interest income. Sales fell 10% from the fourth quarter, but server chip sales were strong. With 75% of sales outside the U.S., INTC sees no weakness due to macroeconomics. Gross margin dropped on weak NAND pricing, but met revised guidance. Operating costs were down as headcount fell. We see market share gains and server chip sales aiding margins, but think growth is almost reflected in shares. We keep our 2008 EPS estimate of $1.40. We raise our 12-month target price by 1 to 24 on higher relative metrics and reduced risk view. -C. Montevirgen
S&P REITERATES STRONG BUY RECOMMENDATION ON SHARES OF COCA-COLA (KO) 60.72):
First quarter operating EPS of $0.67, vs. $0.64, beats our estimate by $0.04 on sales growth at 21%, better than expected, driven by forex and a 5% rise in concentrate sales. We think results highlight broad diversity of KO operations, with solid international results offsetting flat U.S. volumes. Sparkling volumes rose 3% and non-carbonated advanced 17%. Zero's volume in U.S. rose more than 40%, continuing to show momentum. Though favorable forex is likely to be reinvested, we raise our 2008 estimate by $0.08 to $3.09 on slightly better volumes and price/mix. We keep our 72 target price. -E. Kwon-CFA
S&P REITERATES BUY RECOMMENDATION ON SHARES OF CSX CORP (CSX; 57.77):
Posts first quarter EPS, before special items, of $0.80 vs. $0.50, exceeding our $0.75 estimate due to strong pricing and mix improvement despite a decline in carloadings. We are lifting our EPS estimate for 2008 by $0.07 to $3.52, and 2009's by $0.15 to $3.97, as we see the considerable investment being made in network contributing to efficiency gains and improving margin over the next several quarters. We are raising our 12-month target price by 9 to 67 to reflect earnings revisions and a modestly higher enterprise value/EBITDA valuation, driven by what we see as improving fundamentals. -K. Kirkeby, CFA
S&P MAINTAINS HOLD RECOMMENDATION ON SHARES OF BLACKROCK (BLK; 202.91):
First quarter adjusted EPS of $1.90, vs. $1.59, misses our $2.01 estimate. Assets under management came in slightly lower than we expected, as strong liquidity flows were offset by outflows elsewhere and market depreciation. Proprietary investment losses also hurt the bottom line, but a lower tax rate helped. We are encouraged by the pipeline of customer wins to be funded. We are trimming our 2008 EPS estimate by $0.09 to $8.46, and our 2009 estimate by $0.17 to $9.55. We are keeping our target price of $225, 26.6 times our 2008 EPS estimate, in line with BLK's historic premium multiple to peers. -M. Albrecht
S&P MAINTAINS BUY OPINION ON CLASS A AND B SHARES OF NEWS CORPORATION (NWS; 18.22):
Effective immediately, directors terminate NWS's rights plan, a "poison pill" deterrent first set up in 2004 (and later extended), as Liberty Media (LINTA; 15.60) amassed a major voting stake in the company. Expected move comes after February 2008 close of NWS's DirecTV (DTV; 25.59) swap with LINTA. Also, NWS eliminated its classified board structure, making all directors subject to re-election for a one year term starting with 2008 annual meeting. We see positive impact on developments that should also help ease recent concerns by corporate governance detractors. -T. Amobi, CPA, CFA