S&P Keeps Hold on Intel

Analyst Amrit Tewary says rival AMD faces challenges in its suit against the chip giant. Also: More Katrina-related analysis

Intel (INTC ): Reiterates 3 STARS (hold) Opinion

Analyst: Amrit Tewary

In its formal legal response to a June lawsuit by Advanced Micro Devices (AMD ), Intel asserted that its business practices are fair and lawful. We think Advanced Micro Devices will bear a large burden of proof if the suit goes to trial. In order to be successful, we believe Advanced Micro Devices will need to present compelling evidence that Intel not only illegally stifled its rival in the microprocessor market, but also hurt consumers in the process. We think it will be challenging for Advanced Micro Devices to prove consumer harm, given that declining personal computer prices in recent years have resulted in part from lower microprocessor costs.

CenturyTel (CTL ): Maintains 5 STARS (strong buy) Opinion

Analyst: Todd Rosenbluth

We believe that the rural-based telecom provider CenturyTel has not been adversely affected by Hurricane Katrina. The company tells S&P that less than 0.5% of its access lines were negatively impacted by the storm and that its headquarters building in Monroe, Louisiana is intact. Indeed, we believe that CenturyTel might be an indirect beneficiary of this tragic event, as displacement of the population it serves could possibly increase its customer base. We are leaving our $2.31 operating earnings per share estimate for 2005 unchanged. We believe CenturyTel shares are undervalued relative to their peers and recommend buying them.

H&R Block (HRB ): Maintains 3 STARS (hold) Opinion

Analyst: Andrea West, CFA

H&R Block posted a July Quarter loss of 9 cent earnings per share vs. a restated loss of 11 cents, better than our 13 cent loss estimate. The financial services company's revenues rose by 26% on increases in all its business segments. Profits rose as mortgage services advanced on 60% higher mortgage originations, despite narrowing margins. We see H&R Block's declining margins in the mortgage business being offset by its improving profitability in tax and other segments. We continue to expect fiscal year 2006 (ending April) revenues to rise by 13% and see earnings per share of $2.24. Our 12-month target price remains $30.

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