S&P: Still Accumulate Oracle

Also: Analysts' opinions on Alcoa and Janus Capital

Oracle (ORCL ): Reiterates 4 STARS (accumulate)

Analyst: Jonathan Rudy, CFA

A federal judge rejected the government's request to block Oracle's proposed $7.7 billion bid to acquire PeopleSoft (PSFT ). We believe that this decision removes a significant hurdle to this potential acquisition, and that PeopleSoft's management team will have to seriously consider Oracle's $21 per share cash offer. Additionally, we believe that any consolidation would benefit the overall enterprise software industry. Yet, a potential deal is still not a certainty, in our view, as PeopleSoft's management team has done everything possible in order to fend off Oracle's bid.

Alcoa (AA ): Reiterates 4 STARS (accumulate)

Analyst: Leo Larkin

Alcoa preannounced third-quarter earnings per share from continuing operations of 30 cents to 35 cents, well below our 53-cent estimate and the Street's consensus of 52 cents. The company noted that unusual items including a strike, an unscheduled plant outage, and restructuring charges cut EPS by some 7 cents to 9 cents. It also cited weakness in automotive, packaging, and European markets. On that basis, we have cut our full 2004 EPS estimate to $1.60 from $1.86, but are keeping our 2005 forecast at $2.25, assuming continued economic growth and resolution of the strike. We continue to view Alcoa as a vehicle for capitalizing on a cyclical upturn in aluminum.

Janus Capital (JNS ): Reiterates 1 STARS (sell)

Analyst: Robert Hansen, CFA

Janus reported assets under management of about $128 billion at the end of August, down nearly 1% from the prior month on $1 billion in net outflows and market depreciation. We see continued net outflows in 2005 even though Janus reached agreements with regulators and hired a new CIO. We are leaving our EPS estimates unchanged at 64 cents for 2004 and 55 cents for 2005. Our 12-month target price remains $11, 20 times our 2005 EPS estimate and a significant premium to the peer average of 17 times. Trading at 25 times our 2005 EPS estimate, we think Janus shares will decline.

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