Still Buy PepsiCo

Also: analysts' opinions on HCA and Lexmark

Pepsico (PEP ): Maintains 5 STARS (buy)

Analyst: Richard Joy

Pepsi posted Q1 EPS $0.34 vs. $0.29, $0.01 better than expected. Worldwide beverage profits were up 16% on higher pricing and volumes. Frito Lay segment profit was up a strong 15%, on a 10% profit rise in North America and 34% internationally. S&P sees continued growth from new products and pricing gains. Tropicana profit is even with year-ago results, as strong volumes were offset by energy costs. Pepsico sees 2001 EPS growth of 12%-13%. S&P is keeping its 2001 EPS estimate at $1.65. The acquisition of Quaker Oats is seen closing by June. With strong momentum and earnings visibility, Pepsico is attractive at 25 times S&P's 2001 estimate.

HCA-The Healthcare Co. (HCA ): Reiterates 3 STARS (hold)

Analyst: Robert Gold

HCA posted Q1 operating EPS a penny above expected at $0.60 vs. $0.53 on a 5.4% revenue gain. Same-facility admissions rose a modest 2.3%, in line with the industry average, reflecting a soft influenza season. However, improved pricing pushed same-facility revenue-per-admission up a strong 6.9% to $7,528. Tight cost controls drove the EBITDA margin to 21.6% vs. 21.2%. Occupancy levels were 55.8% vs. 53.8%. Higher interest costs partially reflected a delay in the finalization of a Medicare probe. Results look solid. S&P will update after a Monday morning conference call.

Lexmark International (LXK ): Maintains 4 STARS (accumulate)

Analyst: Megan Graham-Hackett

Lexmark posted Q1 operating EPS of $0.60 vs. $0.59, above the Street's $0.58 mean and above S&P's $0.55 estimate. Revenue was up 12%, beating S&P's 10% estimate. Core printer/supplies business was up 16% (20% excluding the currency impact). EPS upside is mainly from a better-than-expected gross margin of 33.4% vs. 35.3% and 30.8% in Q4. The company cited good demand for laser and inkjet printers. Lexmark sees Q2 revenues up 10%-15%, in line with S&P's 11% estimate. But the company's EPS estimate of $0.61- $0.67 is above S&P's $0.53 estimate. Lexmark maintains its prior guidance of 15%- 20% EPS growth in 2001. S&P will update after a Monday morning conference call.

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