Accumulate Oracle

Also: analysts' opinions on Hughes Electronics and US Airways

Oracle (ORCL ):Reiterates 4 STARS (accumulate)

Analyst: Jonathan Rudy

A Wall Street Journal article depicts Oracle's E-business suite, 11i, as error prone and difficult to implement. While this news is somewhat disconcerting, S&P would be surprised if there were not some challenges with significant new-product implementation. However, Oracle seems to be working through its early missteps. The company should also benefit from the rollout of database and application server upgrades. With improving profit margins, a return-on-equity above 40%, and 15%-20% long-term growth, S&P thinks this industry leader remains attractive.

Echostar Communications (DISH ): Maintains 4 STARS (accumulate) Hughes Electronics (GMH ): Maintains 3 STARS (hold)

General Motors (GM ): Maintains 3 STARS (hold)

Analyst: Howard Choe

In an unsolicited bid, Echostar is offering 0.75 shares for each Hughes Electronics share and the assumption of $1.9 billion in debt, valuing the deal at $32.3 billion or $22.8 per Hughes share based on Friday's close. The bid is likely to have difficulty gaining approval by Hughes and General Motors, as well as regulatory bodies. While the stock swap has tax benefits for Hughes holders, the competing News Corp. bid is expected to have a larger cash component preferred by GM. The offer adds leverage to Hughes' negotiations with News Corp. S&P expects modest pressure on Echostar shares and a modest rise in Hughes shares on Monday.

US Airways (U ): Maintains 3 STARS (hold)

Analyst: Richard Stice

New York-based holding company Global Airlines on Sunday announced a $1.8 billion offer, or $27 per share in cash and stock for US Airways. Global also would also assume nearly $8 billion in debt. Global had previously made a pitch to acquire TransWorld Airlines. The terms offered a call for Global to receive a $500 million termination fee from US Airways. US Airways had no immediate comment on the proposal. On the surface, the deal sounds appealing. But many details, as well as a quest for regulatory approval, remain. S&P would hold shares until a clearer picture develops.

Medarex (MEDX ): Maintains 4 STARS (accumulate)

Analyst: Frank DiLorenzo

The maker cancer therapy products posted Q2 EPS of $0.06, well ahead of S&P's $0.01 loss estimate. $8.2 million revenue was $1 million above S&P's view. Since June, Medarex has entered into five new or expanded deals whereby it will license its technology or participate in the development and commercialization of antibodies. The company is meeting its goal of averaging a deal per month and S&P expects partners to begin development of antibodies by 2002. S&P sees EPS of a penny in 2001, and losses per share of $0.21 in 2002 and $0.24 in 2003. On a potential future royalty stream, cash, and market-capitalization discount to peers, Medarex is attractive.

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