S&P MAINTAINS BUY RECOMMENDATION ON SHARES OF APPLE (AAPL; 162.89):
Apple reports March-quarter EPS of $1.16, vs. $0.87, which is above our estimate of $1.04. Revenues rose 43%, led by a 58% increase in the mainstay PC segment and 35% growth in Music. PC unit sales grew at 3-times the industry pace, and we believe market share gains will continue through fiscal year 2009 (September). Operating margins narrowed. The tax burden eased as international business expanded. We are raising our EPS estimates to $5.30 from $5.15 for fiscal year 2008, and to $6.50 from $6.35 for fiscal year 2009. We are increasing our 12-month target price to 200 from 186, based on our updated p-e analysis. -T. Smith, CFA
S&P MAINTAINS HOLD OPINION ON MOTOROLA SHARES (MOT; 9.13):
We are lowering our earnings projections after Motorola's first quarter conference call where results matched our $0.05 loss forecast despite a sharper sales decline. While encouraged by gross margin stability, we see an '08 operating loss per share of $0.09, cut from prior breakeven forecast, on weaker sales. We see handset profitability returning in the fourth quarter, later than prior forecast. Despite gains in enterprise and network mobility segments, we trim our price/sales-based target price by 1 to 11. Without more details on pending spinout of handset unit, we see shares in narrow trading range. -T. Rosenbluth
S&P UPGRADES SHARES OF BRISTOL-MYERS TO BUY FROM HOLD (BMY; 22.02):
Following BMY's conference call, we are further encouraged by the strength of the company's promising pipeline, especially in new therapies for cancer and diabetes. We now also have greater confidence in BMY's ability to streamline its cost structure, and maintain growth after Plavix loses patent protection in 2010. In addition, we think the company is executing on its strategic program to divest lower-margin non-core pharma businesses and invest proceeds in new higher-margin pharmaceutical products. We keep our 26 target price, and note BMY's dividend is yields 5.6%. -H. Saftlas
S&P UPGRADES SHARES OF WENDY'S TO HOLD FROM SELL, BASED ON TRIARC MERGER PACT (WEN; 25.32):
WEN agrees to merge with Triarc Cos. (TRY; 6.30, NR) in an all stock deal of 4.25 TRY Class.A shares per WEN common share. The agreement is subject to customary closing conditions and shareholder approval, and is expected to close in the second half of 2008. Our view has been that tight credit conditions would prohibit a leveraged deal, so we are not surprised that this is an all stock transaction. Separately, WEN reports first quarter EPS of $0.05 vs. $0.15, well below our $0.12 estimate. Based on deal value, we raise our target by 8 to 26. -M. Basham
S&P DOWNGRADES OPINION ON SHARES OF PULTE HOMES TO SELL FROM HOLD (PHM; 13.10):
PHM posts $2.75 first quarter loss per share, vs. $0.34 EPS, after asset impairments of $$664 million, wider than our $0.50 loss estimate. Despite having $1 billion in cash, PHM has booked asset writedowns near $3.8 billion since the beginning of 2006, which gives us concern that the company may be lagging the turnaround improvements of its peers. First quarter's net new order values declined 50% year-over-year. We are widening our 2008 loss estimate to $3.00 from $0.35 loss, but are keeping our 2009 $0.50 EPS estimate. Applying a forward price-to-book of 0.8 times, near peers, we are lowering our 12-month target price to 12 from 14. -K. Leon, CPA
S&P MAINTAINS HOLD OPINION ON SHARES OF FORD MOTOR (F; 8.20):
Based on a preliminary report, before special items, first quarter EPS of $0.05, vs. loss of $0.15, beats our $0.01 loss forecast. Results exclude Jaguar and Land Rover in 2008. The outpeformance mainly reflects greater-than-expected cost savings despite unfavorable mix and lower-than-expected sales. In our view, results were strong outside U.S. Financial services and Volvo, but were below our forecast. Due to lower interest rates on cash balances, we are lifting our net interest expense view. We see losses for 2008 in a difficult economic and competitive environment. -E. Levy