Microsoft Jumps on an Analyst's Upgrade

Starbucks advances; InterMune soars; plus more of today's stocks in the news

Merrill upgraded Microsoft (MSFT ) to buy, and added the stock to its Focus One List. A Merrill analyst said he sees potential for earnings per share upside, a possible increase in Microsoft's dividend due to tax changes, and valuation disparity to its peer software group.

Starbucks (SBUX ) posted 27% higher consolidated net revenues for the 5-week period ended June 29, and a 10% rise in comp-store sales. Lehman raised its estimates.

Banc of America upgraded InterMune (ITMN ) to buy from neutral, saying the replacement of CEO Scott Harkonen is a good start to rebuilding credibility with investors. Recently, InterMune lowered the fiscal 2003 guidance for pulmonary fibrosis treatment Actimmune.

First Albany tied Avid Technology's (AVID ) stock-price rise in part to short covering ahead of a second-quarter earnings report. Also, he says channel checks and talks with post-production resellers remain positive on the new Adrenaline product.

Constellation Brands (STZ ), the world's largest distributor of wines, posted 41 cents (including charges and financing costs) vs. 41 cents first-quarter earnings per share on a 19% revenue rise. Thomas Weisel cut its estimates.

Atlantic Coast Airlines (ACAI ) and United Airlines were unable to reach an agreement regarding the United Express regional-jet operations program. Raymond James downgraded to market perform.

J.P. Morgan upgraded Kindred Healthcare (KIND ) to overweight from neutral. On Tuesday Kindred announced the completion of a divestiture of Florida and Texas nursing center operations.

Baxter International (BAX ) will take a 30-cent second-quarter charge for center closings, workforce cuts, and infrastructure cuts. Baxter sees 10 cents to 12 cents second-quarter earnings per share (including the charge). The health-care products maker cut the 2003 earnings per share from continuing operations guidance to $1.65-$1.75 (including the charge) on lower growth in its BioScience business. J.P. Morgan downgraded to neutral from overweight.

Benchmark Electronics (BHE ) expects to meet or exceed the Street's second-quarter estimates. S&P reiterates avoid.

Monterey Pasta (PSTA ) sees 2 cents to 3 cents second-quarter earnings per share, below analysts' consensus for 5 cents. The pasta maker cited a transition of products with a major customer, start-up issues with new packaging, and legal fees related to securities lawsuits. Monterey posted 10% higher second-quarter sales.

ArvinMeritor (ARM ) agreed to sell its Light Vehicle Systems Columbus, Ind., exhaust tube manufacturing operation to AK Tube, a unit of AK Steel. Terms were not disclosed.

Invitrogen (IVGN ) agreed to acquire Molecular Probes Inc, a leader in fluorescence-based technologies, for about $325 million. J.P. Morgan upgraded to overweight from neutral.

Lehman Brothers says it's in talks with Neuberger Berman (NEU ) regarding a potential combination.

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