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Still Hold McDermott International

McDermott International (MDR): Keep 3 STARS (hold)

Analyst: Tina Vital

The parent company that includes several energy businesses reported Q3 EPS of $0.31 vs $0.09, $0.08 above the Street estimate. EBITDA rose 116%, reflecting robust marine construction activity, especially strong deepwater Gulf of Mexico market. Backlogs were up 11%. Sale of McDermott Engineers & Constructors Ltd. (onshore) to Jacobs Engineering closed October 29. It sees 1001 EPS at $0.60, 2002 at $1.22. Despite shares trading below peers at 9X our 2002 EPS estimate, pending B&W lawsuits & cash liquidity limits growth.

Louisiana-Pacific (LPX):

Still 1 STAR (sell)

Analyst: Michael Jaffe

Louisiana-Pacific (LPX) announced it suspended quarterly dividend and canceled stock buyback program, citing a slumping stock market and desire to preserve financial flexibility. Dividend suspension, which will bring $20 million of annual cash savings, follows other major cost cutting actions taken during year, leaving 2001 loss per share estimate at $1.65, 2002's at $0.90 loss. S&P lauds the company for ongoing actions to cut costs during very tough industry time. But with excess industry capacity likely to hurt panel markets for extended period, S&P recommends putting funds elsewhere.

Davita (DVA): Maintains 4 STARS (accumulate)

Analyst: Phillip Seligman

Davita, a provider of dialysis services, reported a third quarter EPS of $0.31 vs. $0.16, before one-time items. That was $0.06 above S&P estimate on higher revenues than expected. U.S. continental revenue per treatment was $280.16 vs. $275.87. Treatments were up 6.3%, at same centers up 4.1%. EBITDA margin was 23.4% vs. 21.4%, on closed underperforming centers, higher HMO/Medicare rates, and treatment growth. It's pleased with decline in long term debt. S&P raised its 2001 EPS estimate by $0.13, to $1.13, 2002's by $0.16, to $1.34, despite higher Epogen costs. At 14X 2002 estimate, with stable recurring revenue stream, the company should outperform.

Vishay Intertechnology (VSH): Keep 4 STARS (accumulate)

Analyst: Thomas Smith

The maker and supplier of passive and active electronic components posted Q3 loss per share of $0.02 before $0.26 restructuring charges and raw material writedown, vs. year-ago EPS of $1.22, in line with Oct. 25 warning. Revenue was down 50%, 13% from Q2. Gross margin before raw material writedown 19.4% vs. Q2's 26.4%. Unit shipments on track, but pricing in passive components hit hard in industry downturn. Positives include completion Nov. 2 of acquisition of General Semiconductor, which had 2000 sales $494M. S&P will adjust estimates after conference call. With price at 1.6X tangible book modest vs. peers.

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