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S&P Upgrades Energizer to Accumulate

Energizer (ENR): Upgrades to 4 STARS (accumulate) from 3 STARS (hold)

Analyst: Howard Choe

Based on stronger-than-expected marketshare data, S&P has boosted its razor sales and profit assumptions. S&P is raising the 2003 earnings per share estimate to $2.48, from $2.44, is is raising 2004's to $2.78, from $2.73. Also, S&P is raising the 12-month target price to $43, from $42. Energizer's Schick Intuition female shaver gained considerable ground on Gillette's Venus razor, and initial results for Schick's Quattro four-bladed men's razor appear positive. S&P views the catalysts in shaving products and the view of an attractive valuation at 13 times the forward

price-earnings ratio -- 21% below peers -- as likely drivers for outperformance over the next 12 months.

Gillette (G): Downgrades to 3 STARS (hold) from 4 STARS (accumulate)

Analyst: Howard Choe

Since S&P sees few apparent catalysts and with shares trading at a premium to peers, S&P no longer expects Gillette to outperform. The company is facing tougher competition from Energizer's Schick and in the high-margin wet shaving business, which should negatively affect earnings and cash flow. With only product extensions planned over the next six months, Gillette may extend market-share losses. S&P is lowering the 12-month target price to $34, from $37, based on more conservative relative and

discounted cash flow valuation assumptions. S&P still views Gillette as well-positioned in its high-margin, cash-flow rich businesses.

Johnson & Johnson (JNJ): Reiterates 4 STARS (accumulate)

Analyst: Robert Gold

The stock is under pressure Wednesday as the FDA issued a warning letter on subacute thrombosis and hypersensitivity reactions in patients with the Cypher stent. S&P doesn't see this inhibiting J&J's near-term Cypher uptake as the adverse event rate is low. However, this could pressure 2004 sales with Boston Scientific's drug-coated stent launch looming. Amid intense competition in key drug areas, S&P feels a deceleration in sales of the Cyher stent would significantly boost the risk profile of J&J. As a result, S&P is lowering the 12-month target price to $55, from $60, reflecting an expected 2004 p-e that's closer to the drug group average.

Boeing (BA): Maintains 5 STARS (buy)

Analyst: Robert Friedman

The $50 billion-revenue aerospace and defense behemoth posted third-quarter S&P Core earnings per share that's calculated at 20 cents, compared with S&P's 13 cents estimate. Boeing made a $1.2 billion cash contribution to its underfunded pension plan, which resulted in negative $200 million third-quarter GAAP operating cash flow. However, since S&P estimates Boeing's plan assets will grow by $3.3 billion in 2003, covering its net 2003 pension costs, S&P is reclassifying the $1.2 billion contribution as a financing item. As such, S&P still estimates 2003 free cash flow of $2.5 billion. S&P's 12-month target price, based on a discounted cash flow model, still values Boeing at $45.

Corinthian Colleges (COCO): Reiterates 5 STARS (buy)

Analyst: Michael Jaffe'

The for-profit education provider's September-quarter earnings per share of 41 cents, vs. 30 cents, is a penny above S&P's estimate. The results reflect a 16% rise in the same-school population, tuition hikes, takeovers, new campuses, and a faster-than-expected purchase integration. Corinthian sees ongoing merger integration narrowing margins, but raised the fiscal 2004 (June) earnings per share guidance to $1.88, from $1.77 to $1.80. Viewing this as cautious, S&P is hiking the earnings per share estimate to $1.95, from $1.85, and is raising the 12-month target price to $83, from $76, based on p-e-to-growth and discounted cash flow analyses. S&P thinks the shares are undervalued at 1.2 times the 25% earnings per share growth that S&P projects for the next few years.

Halliburton (HAL): Reiterates 3 STARS (hold)

Analyst: James Kartsonas

The oil services company's third-quarter earnings per share of 32 cents (before litigation charges of 11 cents), vs. 28 cents, is a penny below S&P's estimate. Total revenues rose 15%, with most of the gain from Iraq-related work, which contributed about 5 cents of earnings. Operating margins in the oilfield segment narrowed by 380 basis points, but widened by 70 basis points in the engineering & construction segment. S&P is lowering the 2003 earnings per share estimate to 84 cents, from 88 cents, see and 2004's at $1.37. S&P is maintaining the 12-month target price of $27, based on expectations of shares trading at 10 times S&P's 2004 EBITDA estimate, in line with peers.

Moody's (MCO): Reiterates 4 STARS (accumulate)

Analyst: William Donald

The financial ratings and research company posted 56 cents third-quarter earnings per share, vs. 43 cents -- beating S&P's 50 cents estimate and the Street's 52 cents estimate. Revenue rose 23%, with foreign exchange gains contributing 175 basis points. Corporate and global research revenues climbed 37% and 31%, respectively, while the KMV quantitative services unit, structured finance, and global financial institutions each gained more than 20%. Operating margin widened to 53% from a year-ago's 51%. S&P is raising the 2003 earnings per share estimate by 10 cents, to $2.40 and 2004's by 8 cents, to $2.65. Based on higher discounted cash flow assumptions, S&P is raising the 12-month target price to $70, from $63.

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