S&P Lowers XTO Energy to Buy

Analyst Charles LaPorta downgrades XTO on valuation. Plus analysts' comments on Aspen Insurance Holdings, MetLife, and more

XTO Energy( XTO ): Cuts to 4 STARS (buy) from 5 STARS (strong buy)

Analyst: Charles LaPorta

We believe XTO will benefit from the impact of Hurricane Katrina in the Gulf of Mexico, given that its core areas lie in the Mid-Continent, San Juan, and Rocky Mountain Basins, which were virtually unaffected. We are raising our 2005 and 2006 earnings per share estimates to $2.95 and $3.50 from $2.75 and $3.20, respectively, and our target price rises $3 to $47, reflecting a premium-to-peers p-e of 15.9 times our 2005 estimate. We believe XTO is one of the best-managed and well-positioned companies in our coverage. However, we also think its share price is increasingly reflecting that view.

Aspen Insurance Holdings (AHL ): Ups to 5 STARS (strong buy) from 4 STARS (buy)

Analyst: Catherine Seifert

Bermuda-based reinsurer Aspen Insurance Holdings announced that its Katrina-related claims will likely total $150 million after tax. We are cutting our 2005 earnings per share estimate by $2.08 to $2.07, reflecting this impact. The losses, mostly from property reinsurance, were actually less than we expected. We believe the clarity regarding Katrina losses and Aspen Insurance Holdings' comments that premium growth may exceed guidance provide its shares with two catalysts. Our 12-month target price is $34.

MetLife( MET ): Reiterates 4 STARS (buy) Opinion

Analyst: Frank Braden

MetLife announced that the regulator NASD made a preliminary determination to file charges against the Metlife units MetLife Securities, New England Securities, and Walnut Street Securities. The late trading charges stem from an investigation into the company's 2003 mutual fund transactions after its trading deadline. Although our view is tempered by the investigation, we think MetLife is attractive based on its relative valuation to peers and growth potential. Our target price remains $56, as we believe the violations are relatively small in scope and we do not expect to see them have a material financial impact.

Yellow Roadway (YELL ): Maintains 3 STARS (hold) Opinion

Analyst: Andrea West, CFA

Yellow Roadway cut its third-quarter earnings per share outlook by 20 cents to between $1.40 and $1.45, based on its difficulties implementing new operating processes at Roadway, in addition to a 5 cents earnings per share hit from Hurricane Katrina. We find Yellow Roadway's process improvement project difficulties concerning, given our view that the company's acquisition-driven strategy relies upon ongoing cost savings from restructuring and efficiency programs. We are reducing our earnings per share estimates to $5.19 from $5.45 for 2005, and to $5.80 from $6.00 for 2006. We are cutting our 12-month target price to $46 from $57, based on a blend of our discounted cash flow and relative valuation models.

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