Oracle (ORCL):Reiterates 4 STARS (accumulate)
Analyst: Jonathan Rudy
A Wall Street Journal article depicts Oracle's E-business suite, 11i, as error prone and difficult to implement. While this news
is somewhat disconcerting, S&P would be surprised if there
were not some challenges with significant new-product
implementation. However, Oracle seems to be working through
its early missteps. The company should also benefit from the rollout of
database and application server upgrades. With improving
profit margins, a return-on-equity above 40%, and 15%-20% long-term
growth, S&P thinks this industry leader remains attractive.
Echostar Communications (DISH): Maintains 4 STARS (accumulate)
Hughes Electronics (GMH): Maintains 3 STARS (hold)
General Motors (GM): Maintains 3 STARS (hold)
Analyst: Howard Choe
In an unsolicited bid, Echostar is offering 0.75 shares for each Hughes Electronics share and the assumption of $1.9 billion in debt, valuing the deal at $32.3 billion or $22.8 per Hughes share based on Friday's close. The bid is likely to have difficulty gaining approval by Hughes and General Motors, as well as regulatory bodies. While the stock swap has tax benefits for Hughes holders, the competing News Corp. bid is expected to have a larger cash component preferred by GM. The offer adds leverage to Hughes' negotiations with News Corp. S&P expects modest pressure on Echostar shares and a modest rise in Hughes shares on Monday.
US Airways (U): Maintains 3 STARS (hold)
Analyst: Richard Stice
New York-based holding company Global Airlines on Sunday announced a $1.8 billion
offer, or $27 per share in cash and stock for US Airways. Global also would also assume
nearly $8 billion in debt. Global had previously made a pitch to acquire TransWorld Airlines. The terms offered a call for Global to
receive a $500 million termination fee from US Airways. US Airways had no immediate comment on the proposal. On the surface, the deal sounds
appealing. But many details, as well as a quest for regulatory approval, remain. S&P would hold shares until a clearer picture develops.
Medarex (MEDX): Maintains 4 STARS (accumulate)
Analyst: Frank DiLorenzo
The maker cancer therapy products posted Q2 EPS of $0.06, well ahead of S&P's $0.01 loss estimate. $8.2 million revenue was $1 million above S&P's view.
Since June, Medarex has entered into five new or expanded
deals whereby it will license its technology or participate
in the development and commercialization of antibodies. The company is meeting its goal of averaging a deal per month and S&P expects partners
to begin development of antibodies by 2002. S&P sees EPS of a penny in 2001, and losses per share of $0.21 in 2002 and $0.24 in 2003.
On a potential future royalty stream, cash, and market-capitalization discount to peers, Medarex is attractive.