CS First Boston Trims First Data to Neutral

Analyst Dris Upitis says he cut his rating on growth and margin concerns

CS First Boston downgraded First Data (FDC ) to neutral from outperform.

Analyst Dris Upitis says he cut on growth and margin concerns. In the Payment unit, he estimates foreign exchange, acquisitions, and investment gains contributed 5% to 7% to revenue growth. He calculates investment gains may be contributing 2% of growth and 300 basis points in operating margin, which may be blurring the reality of Western Union's current level of growth and profitability.

He notes the company's merchant-alliance structure may encounter its first real challenges. Also, TeleCheck continues to weigh on profitability and there's a mix shift toward lower-revenue debit cards. Upitis cut the $2.45 2005 EPS estimate to $2.38 and set a $42 target.

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