COR Therapeutics (CORR ): Downgraded to 3 STARS (hold) from 5 STARS (buy)
Analyst: Frank DiLorenzo
COR announced Integrilin sales for Q1 will be lower than expected, reflecting excess inventory. The drug maker expects $37-$39 million in Q1 sales and a loss per share of $0.05-$0.07. S&P is lowering its Integrilin sales estimate for full year 2001 to $243 million from $261 million and cutting the 2002 estimate to $295 million from $357 million. S&P is also lowering COR's 2001 EPS estimate to $0.33 from $0.41, and 2002's to $0.46 from $0.56. S&P feels COR's pipeline is less robust than some of its peers. Using earnings growth and cash flow models, COR is fairly valued for our lowered growth rate expectations.
Target Corp. (TGT ): Maintains 3 STARS (hold)
Analyst: Karen Sack
The department store concern posted better than expected fiscal Q4 earnings of $0.61 vs. $0.53 on a weak 1.8% same-store sales gain. Full fiscal 2001 earnings (Jan.) rose 9.2% to $1.18. The department store segment disappointed S&P, with a 36% drop in operating profit. Operating profit is up 10% in Target segment and 31% at Mervyns. Target discount stores continue to be a growth engine, with 78% of revenues and 83% of pretax profit. Target is acquiring 35 Wards stores and will reopen at least 30 of these as Target stores in 2002. S&P still sees a 15% rise in EPS to $1.58 in fiscal 2002 but expects continued sales weakness in the near term to keep the stock as market performer.
H.J. Heinz (HNZ ): Maintains 3 STARS (hold)
Analyst: Richard Joy
Shares are down Tuesday on the company's reduced earnings guidance. Heinz sees fiscal 2001 (Apr.) EPS of $2.54-$2.56, below S&P's $2.77 estimate. The packaged-foods company expects full fiscal 2001 sales up 3% before the currency impact, down 1% after. Heinz cites low tuna prices and higher energy costs, as well as inventory reductions and lower sales expectations for Australia/New Zealand. Despite selected areas of weakness, Heinz continues to make progress with its turnaround. S&P is reducing its fiscal 2001 EPS estimate by $0.23 to $2.54, and cutting fiscal 2002's estimate by $0.25 to $2.75. At 16 times the fiscal 2001 estimate, S&P views shares as amply valued at a discount to large-cap food peers.
Siebel Systems (SEBL ): Maintains 4 STARS (accumulate)
Analyst: Jonathan Rudy
Siebel's shares are down 10% Tuesday on news that Tom Hogan, senior vice president of sales, is resigning. However, Hogan departed to become Vignette's new president and COO. While any executive turnover is not positive, S&P believes that the departure is not indicative of any deeper problems at Siebel. S&P still anticipates that the market for Customer Relationship Management software will grow nearly 50% in 2001. At 38 times S&P's 2001 EPS estimate of $0.78, shares of this industry leader are attractive in a rapidly growing market.
Intel (INTC ): Reiterates 4 STARS (accumulate)
Analyst: Megan Graham-Hackett
Intel announced price cuts on its Pentium and Celeron chip lines. The company's 19% cut to the 800Mhz Celeron chip was the largest, but this chip hadn't been cut yet in 2001, while slower speed Celerons were cut more sharply at the end of January. Pentium III's were also trimmed (10% or less), but these chips also had witnessed deeper cuts at January's end, as Intel continues its transition to the new Pentium IV. In all, the price cuts look reasonable and don't show acceleration from January's cuts, which suggest that the PC market hasn't gotten materially worse. S&P did not change its estimates. At 26 times the 2001 estimate, S&P thinks the shares are attractive.
Citigroup (C ): Maintains 5 STARS (buy)
Analyst: Stephan Biggar
Citigroup reportedly took out earnings insurance for a slowing economy via a plan for expense savings of up to $2 billion. The global corporate and investment bank segment and global consumer segment are likely to be largest targets of cost cutting as Citigroup deals with the prospect of a less favorable equity market environment and softer consumer spending. S&P likes Citigroup's proactive stance in keeping its expense base in line with revised revenue growth expectations. The firm's ability to maintain EPS momentum in a less robust economy is key to garnering the multiple expansion for which Citigroup has long argued.