S&P Ups Credit Suisse Group to Buy

Analyst John Muir says the company has recovered marketshare. Plus: upgrades on Lamar Advertising and Flowserve

Credit Suisse Group (CSR) : Ups to 4 STARS (buy) from 3 STARS (hold)

Analyst: John Muir

We are raising our 2006 earnings per American Depositary Share estimate by 68 cents to $5.89, and 2007's by 59 cents to $6.17. The finanical services firm has recovered marketshare in global sales trading and in corporate finance due to currency fluctuations. While Credit Suisse still lags peers in profit margin and cost ratios, we have seen recent improvement that we expect to continue as the company focuses on greater integration of its bank. We view the planned spinoff of the Winterthur insurance unit as a risk-reducing, growth-enhancing move. As a result, we are raising our 12-month target price by $11 to $73.

Lamar Advertising (LAMR) : Ups to 3 STARS (hold) from 2 STARS (sell)

Analyst: Tuna Amobi

This reflects a stronger first quarter update on digital billboards than we had expected as Lamar Advertising says initial units were generating five to eight times the revenues of static units. The company is likely on track to triple its digital units to well over 200 by the end of 2006. While digital transition may bump into local regulatory hurdles, we now think emerging model could sustain over 60% margins, and ROI potentially over 30%, helped by declining technology cost. With overall trends stronger, our 12-month target price rises $15 to $60.

Glatfelter (GLT) : Ups to 5 STARS (strong buy) from 4 STARS (buy)

Analyst: Stuart Benway, CFA

Glatfelter posted first quarter earnings per share (EPS) of 16 cents vs. 14 cents, a penny ahead of our estimate. Sales were up 16% on solid volume gains and modest price increases. Glatfelter recently completed acquisitions that we believe will nearly double its revenue base and add significantly to earnings. We are raising our 2006 EPS estimate to 80 cents from 65 cents and we are introducing 2007's at $1.40. We think Glatfelter has new avenues for profit expansion that are not reflected in the current stock price, and we are raising our 12-month target price to $24 from $20 based on the expected benefits.

Charles River Labs (CRL) : Cuts to 3 STARS (hold) from 4 STARS (buy)

Analyst: Jeffrey Loo, CFA

First quarter EPS of 50 cents after option cost vs. 55 cents, both adjusted, is 7 cents below our estimate on soft sales in transgenic and Interventional and Surgical Services units. Charles River Labs agrees to sell its Phase II-IV unit to Kendle (KNDL), subject to needed approvals, and will close the ISS unit. The Phase II-IV was small, but we are disappointed by the planned sale. It was acquired just 18 months ago and we see robust demand for this segment. Charles River Labs cuts its 2006 guidance by 22 cents to $2.12 to $2.18 to reflect the sale. We are lowering our 2006 EPS estimate by 26 cents to $2.14 and our target price by $10 to $44.

Teva Pharmaceutical (TEVA) : Cuts to 4 STARS (buy) from 5 STARS (strong buy)

Analyst: Phillip Seligman

First quarter operating earnings per ADR of 37 cents vs. 38 cents is 8 cents below our estimate, mainly on lower-than-expected revenue. Earnings were hurt by higher ADR count and the recently acquired IVAX's higher Selling, Gernal & Administrative cost ratio. We are encouraged by strong drug ingredient sales, higher synergy guidance and TEVA's pipeline. We are reducing our 2006 earnings estimate by 2 cents to $1.90, but we see potential upside if TEVA gets generic Zocor exclusivity. We are lowering our target price by $8 to $46.

Flowserve (FLS) : Ups to 2 STARS (sell) from 1 STAR (strong sell)

Analyst: John F. Hingher, CFA

Our upgrade is based primarily on our view of continued strong momentum in order bookings, and positive conditions in Flowserve's energy, chemical and power end-markets. We are raising our 12-month target price to $55 from $45. Despite our continued positive outlook for many of Flowserve's end-markets, its current valuation appears to us to be excessive.

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