S&P Says Accumulate P.F. Chang's

Also: analysts' opinions on Delta Air and Constellation Brands

P.F. Chang's China Bistro (PFCB ): Reitereates 4 STARS (accumulate)

Analyst: Markos Kaminis P.F. Chang's posted 31% fourth-quarter revenue growth, driven by a 3.8% comparable-store sales rise at Bistro units and the opening of seven Bistro and six Pei Wei units. Comp-store sales benefited 1% from a menu-price increase in Feb., 2003. S&P thinks P.F. Chang shares are down today on a fractional decrease in comp-store results for the 11 Pei Wei locations. Also, the restaurant operator has, in the past, indicated a disinclination to raise prices. S&P views today's share decline as overdone, based on the small size of the Pei Wei store base. The target price of $58 is driven by blend of discounted cash-flow, price-earnings-to-growth, and relative p-e-to-growth.

Delta Air Lines (DAL ): Reiterates 3 STARS (hold)

Analyst: James Corridore

S&P is reducing the 12-month target price on Delta shares to $14, from $15, and is becoming increasingly cautious because of recent volatility in airline shares. S&P also is keeping the p-e in Delta's target price below that for peers, since the company has not yet gotten paycuts from pilots. The target price implies a forward p-e of 11 times S&P's 2005 earnings per share estimate of $1.25, while peers are trading at about 15 times S&P's 2005 estimates. The target price represents potential appreciation of 9%. Given the likely volatility, S&P doesn't think this is enough to warrant adding to positions.

Constellation Brands (STZ ): Maintains 5 STARS (buy)

Analyst: Anishka Clarke

The beer and wine distributor posted November-quarter earnings per share on a comparable basis of 80 cents, vs. 69 cents. S&P had estimated 79 cents. Sales were better than expected, rising 34% on internal growth, acquisitions, and currency gains. Beer sales rose 17% on a buy-in before a major price hike, while strong U.S. and U.K. growth benefited the wines category. Favorable product mix, contained selling, general, and administrative costs, and lower interest expense than expected also aided profits. In 2004, S&P looks for further synergies and margin expansion. At 12 times S&P's calendar 2004 estimte of $2.78, significantly below peers, S&P recommends the purchase of Constellation shares.

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