S&P Says Accumulate Novellus

Novellus (NVLS ): Maintains 4 STARS (accumulate)

Analyst: Colin McArdle

Novellus reported second-quarter operating EPS of 29 cents (GAAP EPS 25 cents), beating our 27 cents estimate and representing a dramatic increase from year-ago results of 5 cents. Second-quarter revenue grew 42% and stood at $338 million, slightly better than our $334 million projection as copper applications in the 300mm market continue to build momentum and the company gains market share. As a result, we are raising our 2004 EPS estimate to $1.22 from $1.07. Our Standard & Poor's Core Earnings estimate for 2004 now stands at 71 cents, up from 56 cents previously.

Avaya (AV ), Cisco CSC(O ), Qualcomm (QCOM ): Maintains 5 STARS (buy); Adtran (ADTN ) and Advanced Fibre (AFCI ): Maintains 4 STARS (accumulate)

Analyst: Ari Bensinger

We believe that communications-equipment vendors are entering a prolonged spending upgrade cycle as service providers and enterprise customers improve their infrastructure to better handle data applications. Recent positive signs in the carrier equipment market include lower pricing for high-speed broadband access, an increased focus on installing fiber to the premise, and the move toward packet-based technology.

Walt Disney (DIS ): Maintains 3 STARS (hold)

Analyst: Tuna Amobi, CPA, CFA

Late Friday, CEO Eisner confirmed recent reports that management would recommend a dividend increase to the board of directors. This news isn't surprising to us, considering Disney's decidedly less aggressive stance on acquisitions and stock buybacks compared with some of its peer conglomerates, and its projected ample $2.1 billion and $2.4 billion of free cash flow in 2004 and 2005. Meanwhile, we believe that reattaining an A- rating on Disney senior debt remains an important management goal, even as its Euro Disney affiliate struggles with financial restructuring.

Satyam Computer (SAY ): Initiates 4 STARS (accumulate)

Analyst: Stephanie Crane

We believe the market for information-technology services is beginning to recover from a cyclical recession, allowing Satyam to benefit from high-end outsourcing solutions through the use of its global delivery model. We expect revenues up double-digits in fiscal 2005 (Mar.), driven by a solid pipeline and improved demand for international outsourcing. After factoring in the company's cost efficiency measures, we look for fiscal 2005 EPS of 90 cents and see fiscal 2006's at $1.04. Our 12-month target price is $23, reflecting a peer-based p-e-to-growth multiple.

NCR Corp. (NCR ): Maintains 3 STARS (hold)

Analyst: Megan Graham-Hackett

NCR preannounced upside to second-quarter results. It now sees second-quarter revenues of $1.44 billion to $1.45 billion, up 6% from a year ago (3% on a constant currency basis) and above our $1.393 billion estimate, aided by strong Teradata and financial self-service revenues. NCR sees second-quarter EPS above 35 cents, vs. our 18 cents estimate. With limited preliminary information, it's difficult to assess the quality of second-quarter earnings, but we're raising our 2004 EPS estimate by 22 cents to $1.42, based on the second-quarter upside. With shares trading at 36 times our 2004 estimate, well ahead of peers, we would hold NCR but not add to positions.