S&P Keeps Buy on Wendy's

Also: Analysts' opinions on Corinthian Colleges and Open Text

Wendy's International (WEN ): Reiterates 5 STARS (buy)

Analyst: Dennis Milton

The fast-food chain reported that August same-store sales grew 2.8% at domestic company-owned Wendy's stores and 1.2% to 1.5% at franchised units. Same-store sales at Tim Horton's soared 9.5% to 9.7% in Canada and 10.4% in the U.S. These results are in line with our estimates. We are maintaining our 2004 earnings per share estimate of $2.37, our 2005 estimate of $2.61, and our 12-month target price of $46. At 13 times our 2005 EPS estimate, the shares are at a discount to peers. We believe Wendy's is entitled to a premium vs. its peer group, given, in our opinion, its superior growth prospects and solid operating history.

Corinthian Colleges (COCO ): Reiterates 2 STARS (avoid)

Analyst: Michael Jaffe

June-quarter earnings per share of 22 cents (before charges), vs. 20 cents one year earlier, is 3 cents above our lowered forecast. Revenue rose 56% on a 22% gain at same-schools, but the company seemingly had trouble integrating the many campuses recently added. We are cutting our fiscal 2005 (ending June) EPS estimate by 5 cents to 90 cents. In our view, Corinthian's expansion was too aggressive, with purchases of 57 campuses and 15 training centers in fiscal 2004, plus 10 new campus openings. Given the operating difficulties we see, and allegations of dishonest business practices, we would avoid the shares. Our 12-month target price stays at $9, based on relative p-e and discounted cash-flow (DCF).

Open Text (OTEX ): Reiterates 4 STARS (accumulate)

Analyst: Scott Kessler

Open Text posted adjusted July-quarter EPS of 27 cents, vs. 23 cents, equal to our estimate, but a penny below the Street's. Sales rose 98%, owing to the IXOS acquisition. Excluding IXOS, growth was 24%. Open Text also announced the purchase of the Vista product from Quest Software; we expect a September closing for the deal, pending approvals. Even with Vista and the recent buy of Artesia, we are cutting our October-quarter EPS estimate to 10 cents from 22 cents. But, we are raising our fiscal 2005 (ending July) projection to $1.20 from $1.09 on these actions and a lower expected tax rate. We are cutting our 12-month target to $28 from $36 on revised peer and DCF analyses.

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