Downgrading Patterson-UTI Energy

Also: analysts' opinions on Microsoft and Amgen

Patterson-UTI Energy (PTEN ): Downgrades to 4 STARS (accumulate) from 5 STARS (buy)

Analyst: Tina Vital

Shares are down 16% this month, reflecting a sell-off of land and Gulf of Mexico drillers on greater-than-expected seasonal natural gas builds. August natural gas tumbled 35% this month. S&P sees larger drillers -- with robust product lines and exposure to international markets -- faring better than smaller drillers. This should drive further consolidation within the sector. Despite shares trading at nine times S&P's 2001 EPS estimate and at a discount to peers, Patterson's smaller size warrants accumulate.

Microsoft (MSFT ): Maintains 3 STARS (hold)

Analyst: Jonathan Rudy

The software titan held an upbeat conference call regarding the reversal of the District Court's previous ruling to break-up the company. However, the positive news has been factored in with the 66% run-up in shares this year. The company believes that license provisions, where it was found using monopolistic tactics, no longer are utilized. While the ruling is positive, the keys to Microsoft's future growth remain the success of Windows XP and X-Box. Potential sanctions by a new court trial or government settlement could still restrict opportunities for Windows XP.

Amgen (AMGN ): Maintains 4 STARS (accumulate)

Analyst: Frank DiLorenzo

The company says its Aranesp anemia treatment is still being reviewed by the FDA, and while its taking longer than expected to receive FDA approval, the delay is likely related final product labeling. Aranesp is currently approved in the European Union. S&P still likes Amgen shares and expects Aranesp to be approved by the FDA in the third quarter. However, approval of this drug in the U.S. is necessary to justify the current valuation of Amgen. S&P is lowering the 2001 EPS estimate by penny to $1.15 and sees $1.49 in 2002. Assuming approval, S&P still feels Amgen will outperform over the next year.

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