Still Accumulate EchoStar

Also: Analysts' opinions on Boeing and Immunex

EchoStar Communications (DISH ): Maintains 4 STARS (accumulate)

Analyst: Howard Choe

Echostar agrees to acquire Hughes Electronics (GMH ) for nearly $26 billion in cash and stock. S&P expects modest pressure on Echostar shares in the short term due to the perception of high regulatory hurdle, but the deal is possible given the trend toward more deregulatory administration and provided sufficient assurances are given for rural viewers. The combined company would have significant potential for revenue and profit gains through deeper market penetration and lower programming and SG&A expenses.

Boeing(BA ): Maintains 5 STARS (buy)

Analyst: Robert Friedman

Despite the loss of the Joint Strike Fighter (JSF) contract to Lockheed Martin, S&P keeps its buy rating on Boeing stock. The program may become the largest military contract ever, but it is by no means assured. Lockheed will build 22 developmental JSFs worth $20 billion. But there's no guarantee that Congress will okay production of all 3,000 fighters (worth $200 billion). Despite Boeing's loss now, S&P expects the company will build part of JSF. S&P's long-term free cash earnings assumptions did not build in JSF win, its still values Boeing shares at about $50, which is a 30% premium from current price levels.

FEI Company (FEIC ): Upgrading to 5 STARS (buy) from 3 STARS (hold)

Analyst: Richard Tortoriello

The maker of electron and ion-beam microscopes should show revenue growth of 15% in 2001, compared with an expected 40% decline for peers in the semiconductor equipment industry. The company is currently seeing demand for its products in defect characterization for new copper interconnect technologies, next-generation 300mm wafer fabs, life sciences applications, and in-line metrology in data storage industry. FEI is attractively valued at 18 times next year's EPS estimate of $1.47, with a p-e 0.8 times S&P's long-term expected growth rate of 23%.

Immunex (IMNX ): Downgrading to 4 STARS (accumulate) from 5 STARS (buy)

Analyst: Frank DiLorenzo

With Immunex advancing sharply since late March, S&P is changing its rating based solely on valuation. Based on S&P's 2002 EPS estimate of $0.37 and projected EPS growth rate of 35%, the tock is trading at a p-e-to-growth ratio of 2 times, which is above the ratio of some other biotechs S&P favors. S&P still likes Enbrel's growth prospects, with likely approval for treating psoriatic arthritis and added manufacturing capacity in 2002 to boost sales. S&P still considers Immunex attractive, but no longer a bargain.

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