S&P Upgrades Inamed to Accumulate

Also: analysts' opinions on Whole Foods and Constellation Energy

Inamed (IMDC ): Upgrades to 4 STARS (accumulate) from 3 STARS (hold)

Analyst: Robert Gold

Inamed posted second-quarter cash earnings per share of 76 cents vs. 54 cents, 10 cents above S&P's forecast as higher-than-modeled 20% revenue growth joined with well-controlled general and administrative costs. S&P believes Inamed captured more share of the U.S. breast-implant market, and says Lap-Band procedure volume growth continues. S&P is raising the 2003 cash earnings per share forecast by 10 cents, to $2.65. S&P's 12-month price target is $67, or 25 times S&P's 2003 earnings per share forecast. At that level, the shares would remain at a 13% discount to S&P's medical-device maker group's average, which S&P feels is appropriate ahead of the FDA panel meeting on silicone-gel breast implants.

Whole Foods Market (WFMI ): Maintains 3 STARS (hold)

Analyst: Joseph Agnese

The organic and natural foods grocery chain posted July-quarter earnings per share of 42 cents vs. 36 cents, in line with S&P's estimate. Net sales rose 15% on an 11% increase in square-footage and comp-store sales growth of 7.6%. Despite rising occupancy costs, margins widened as Whole Foods leveraged its operating expenses over a larger store base. For fiscal 2004 (Sept.) Whole Foods expects comp-store sales growth of 7%-9%, and sees square-footage growth of 10%-11% and earnings per share in the range of $1.87-$1.95. S&P projects long-term earnings per share growth of 17%. But with shares at 30 times S&P's calendar year 2003 earnings per share estimate of $1.72, significantly above supermarket peers, S&P views the upside as limited. Constellation Energy (CEG ): Upgrades to 4 STARS (accumulate) from 3 STARS (hold)

Analyst: Craig Shere

Constellation Energy posted second-quarter operating earnings per share of 58 cents vs. 56 cents, well above S&P's estimate of 39 cents. Results benefited from cost cuts, favorable energy market conditions, strong energy contract origination, and contributions from acquired unregulated operations. The company is increasingly confident that it can generate 10% earnings per share growth over the next three to four years. S&P is raising the earnings per share estimates for 2003 to $2.84, from $2.70, and for 2004 to $3.10, from $2.95. Applying the 2003 average p-e multiple for S&P's regulated-utility coverage group to the company's 2003 earnings per share estimate gives Constellation Energy a 12-month price target of $38.

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