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S&P Says Buy Automatic Data

Automatic Data Processing (ADP): Maintains 5 STARS (strong buy)

Analyst: Jonathan Rudy

ADP reported September-quarter earnings per share of 32 cents, vs. 34 cents, in line with S&P's estimate. Revenues rose 4%, slightly below S&P's estimate, driven by a 10% increase in the employer services segment. The brokerage services segment continued to struggle, showing a 13% revenue decline. S&P is trimming the fiscal 2004 (June) earnings per share estimate to $1.60, from $1.62, and sees $1.77 in fiscal 2005. Trading at a notable discount to fair value based on S&P's discounted cash flow analysis, S&P recommends buying ADP.

Apria Healthcare (AHG): Downgrades to 3 STARS (hold) from 4 STARS (accumulate)

Analyst: Frank Connelly

Given the stock's robust 23% year-to-date price performance, in addition to the risks posed to respiratory medication sales by proposed changes to Medicare legislation, S&P believes the shares will trade in line with the market over the next 12 months. S&P expects strong third-quarter results next week, but sees a greater risk to the 2003 and 2004 forecasts from legislation. S&P's new $29 target price, lowered from $33, applies a multiple of 12, based on S&P's long-term earnings growth rate projection, to S&P's 2004 earnings per share estimate of $2.40. /

DoubleClick (DCLK): Maintains 4 STARS (accumulate)

Analyst: Scott Kessler

DoubleClick posted third-quarter earnings per share of 4 cents, vs. a loss of 46 cents, a penny above S&P's and the Street's estimates. Revenues were flat, as a 17% gain in data revenues was offset by decline at the technology unit. Guidance for the fourth quarter and 2004 were somewhat lower than S&P's estimates. S&P thinks DoubleClick is being conservative and that a recovery in demand for its solutions should lag a recovery in online advertising in general. While S&P is cutting the 2004 earnings per share forecast by 10 cents, to 23 cents, and is trimming the discounted cash flow-derived 12-month target price to $13 from $15, S&P expects DoubleClick to outperform the S&P 500.

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