Merrill Lowers DST Systems to 'Near-Term Accumulate'

Analyst Stephen McClellan says his downgrade reflects the September 11 disruption and the delay in new mutual fund shareholder account contract signings

Merrill Lynch downgraded DST Systems (DST ) to near-term accumulate from buy.

Analyst Stephen McClellan says he's trimming the $1.60 2001 EPS estimate to $1.59, and cutting the $1.95 2002 estimate to $1.86 to reflect the September 11 disruption and the delay in new mutual fund shareholder account contract signings, as well as a revenue ramp up.

McClellan says Output Solutions statement processing may continue to be impacted as processing volumes are diminished by a slowdown in financial markets and the economy. He notes revised EPS estimates still reflect double-digit earnings growth and respectable performance amidst current conditions. McClellan says his 2002 EPS estimate includes the $0.06 FASB 142 benefit. He now sees 2002 revenues up 14%, not 16%. McClellan maintains his long-term buy rating.

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