S&P MAINTAINS HOLD OPINION ON SHARES OF VISA (V; 50.69):
Before $1.1 billion litigation reserve build, Visa posts September-quarter operating EPS of $0.58, vs. pro forma loss of $2.13, $0.02 above our $0.56 EPS estimate. Due to a slowdown in international spending, management expects fiscal year 2009 (September) revenue growth to come in at the lower end of its 11%-15% range. We believe Visa should benefit from its high percentage of debit cards, which are performing better than its credit cards in terms of spending growth. We are maintaining our fiscal year 2009 EPS estimate of $2.70, but lowering our target price by $3 to $54, an above-peer 20 times our fiscal year 2009 EPS estimate. -S. Plesser
S&P MAINTAINS HOLD OPINION ON MOTOROLA SHARES (MOT; 5.46):
Before a number of one-time charges, MOT posts third quarter EPS of $0.05, vs. $0.03, ahead of our $0.02 estimate. Revenues were weaker than we expected, with a decline handset volumes from the second quarter and a surprising decrease in network and enterprise mobility revenues, which had been a stabilizer for MOT. The company announced plans to delay the planned separation of its handset operations beyond original goal of 2009, due to tight credit markets and ongoing restructuring efforts. On the morning call, we look for more details about inventory levels in light of the challenging macroeconomic market. -T. Rosenbluth
S&P MAINTAINS STRONG BUY OPINION ON SHARES OF COLGATE-PALMOLIVE (CL; 60.00):
CL posts third quarter operating EPS of $0.99, vs. $0.86, $0.03 above our estimate. Upside came from sales, which rose 13%, including a 3.5% benefit from forex, beating our 10% growth estimate. The best-performing segments were Latin America, Greater Asia/Africa and Pet Nutrition. Commodity costs pressured the gross margin more than we had projected, but were offset by more leveraging of operating expenses. We think commodity-cost pressures can start to moderate in the fourth quarter. We will update following this morning's conference call, during which we will be listening for forex guidance. -L. Braverman, CFA
S&P MAINTAINS HOLD OPINION ON SHARES OF TARGET CORP. (TGT; 40.72):
Hedge fund Pershing Square Capital Management, which owns nearly 10% of TGT's outstanding shares, has proposed TGT spin off its real estate assets to increase the value of the company. TGT is still evaluating this proposal. TGT shares are down about 19% year to date. We attribute this decline to a weakening economy that is depressing valuations of even best-in-class retailers. We think TGT is well-positioned to weather near-term challenges we foresee, and to improve shareholder value once the economy begins to recover. -J. Asaeda
S&P MAINTAINS BUY RECOMMENDATION ON SHARES OF ENERGIZER HOLDINGS (ENR; 47.85):
ENR posts September-quarter operating EPS of $1.68, vs. $1.03, far above our $1.04 estimate and the $1.18 consensus. The upside was primarily from lower advertising and promotional expenses, early holiday shipments to some key customers, and hurricane-related sales. Underlying battery demand was soft. At current spot forex prices, the company forecasts a negative sales impact of about $135 million in fiscal year 2009 (September), or about a 3% decline, and expects that "holding earnings flat will be a challenge." We are reducing our fiscal year 2009 EPS estimate by $0.68 to $6.20 and our p-e-based target price by $14 to $66. -L. Braverman, CFA