Priceline.com (PCLN):Maintains 3 STARS (hold)
Analyst: Scott Kessler
In a significant win, eBay has tapped Priceline to create travel-booking service for air tickets, car rentals, hotel reservations and vacation packages. The Priceline-powered service will offer products in auction and "Buy It Now" formats, starting in 90 days or so. The announcement lends credence to his opinion that Priceline is a technology leader. Although financial specifics were not given, the deal is positive for Priceline: It expands the company's reach, improves its credibility, and increases outsourcing opportunities. S&P expects more detail on Monday, when Priceline reports fourth quarter results.
Ford (F): Maintains 3 STARS (hold)
Analyst: Efraim Levy
The nation's No. 1 car maker said January sales fell 10%. Car volume shrank nearly 18%, and trucks slid 6%. Jaguar and Land Rover were exceptions to sales declines as they benefited from new products. 0% financing gave way to up to $2,500 cash back at Ford. Chrysler announced that it would enter the fray in offering similar discounts, suggesting the competition will get fiercer. Ford's inventory reduction is positive, and the company sees a modest first quarter production decline. S&P is forecasting lower industry light vehicle sales volume at 15.9 million in 2002.
Walt Disney (DIS): Upgrades to 3 STARS (hold) from 2 STARS (avoid)
Analyst: Thomas Graves
The international entertainment company posted pro forma December quarter earnings per share of $0.15 vs. $0.31, topping analysts' estimates by $0.05. But Disney is guiding towards a weaker than expected March quarter. S&P is adjusting the fiscal 2002 (Sept.) EPS estimate to $0.63, from $0.66. Based on prospects for an improved U.S. economy and higher EPS and cash flow for Disney in fiscal 2003, the stock has some appeal. S&P is initiating an $0.80 fiscal 2003 EPS estimate, and expects longer-term results to be helped by increased digital video disk demand and international theme park openings. But the current price adequately values Disney at an enterprise value of about 12 times the fiscal 2003 estimated EDITDA.
AFLAC (AFL): Downgrades to 3 STARS (hold) from 4 STARS (accumulate)
Analyst: Catherine Seifert
The insurance giant posted $0.34 vs. $0.31 fourth quarter operating EPS in line with S&P's estimates, reflecting the impact of weaker yen, which shaved $0.02 off results. Full year EPS of $1.34 vs. $1.20 was limited by a $0.07 negative impact from weaker yen. Full year revenues were off 1.1% as the 29% new sales growth in its smaller U.S. unit was not enough to offset weakness in Japan. S&P is trimming the 2002 estimate of operating EPS by $0.05, to $1.50. At 17 times the estimate, shares are adequately valued in light of the likely further erosion in Japanese operations.