S&P: Still Sell Nokia, Hold Motorola

Plus: Analysts downgrade Novellus, upgrade Boston Private Financial, and more

From Standard & Poor's Equity Research

Nokia (NOK) : Maintains 2 STARS (sell)

Analyst: Inger Soderbom

Nokia and Siemens (SI) agree to combine their mobile-network operations to create a joint venture that will be the second largest in mobile infrastructure, according to our estimates. We think it is positive that Nokia is significantly improving its position in fixed-line telecom equipment. However, the new venture will need to continue to support two GSM systems, which will limit synergies short term, in our view. Also, Nokia has limited experience performing acquisitions and restructuring businesses, which we believe adds to the risk of the deal.

Motorola (MOT) : Maintains 3 STARS (hold)

Analyst: Kenneth Leon, CPA

With Nokia and Siemens announcing plans to combine their wireless network businesses, we seeMotorola faced with a problem as to who it might partner with. Motorola's cellular network unit is not a market leader in either GSM- orCDMA-based technologies. And Asian vendors that may be suitable partners are conflicted by competing handset offerings. We would besurprised to see a partner from China or Japan that lack Motorola's global presence. We believe Nortel (NT) may be a suitable joint-venture partner,though we do not see that Motorola would gain by purchasing Nortel.

Novellus Systems (NVLS) : Cuts to 2 STARS (sell) from 4 STARS (buy)

Analyst: David Kaplan

Our review of Novellus Systems proxy filings and related research indicates that the 12/16/1999 stock options grant was followed by an upward revision to guidance that drove the stock 33% higher on Monday 12/20/1999. With the Securities and Exchange Commission options-backdating investigation now expanding to the timing of news flow, we are concerned that Novellus Systems may face exposure to this investigation despite the proximity of the 1999 date to grants in other years. In addition, following changing peer multiples, we believe Novellus Systems shares are overvalued, and we are reducing our 12-month target price to $20 from $34.

Centex (CTX) : Ups to 4 STARS (buy) from 3 STARS (hold)

Analyst: William Mack, CFA

With only about 80% of Centex's revenues from homebuilding, it is easily the most diversified builder we cover. The planned sale of the company's sub-prime lending unit, with proceeds intended for further share repurchases, should bolster what we view as the industry's strongest balance sheet. Although our fiscal year 2007 (ending March) earnings per share (EPS) estimate remains $9.00, we believe Centex is the best positioned builder to weather the cyclical trough that we think has begun. Our 12-month target price remains $59.

Boston Private Financial (BPFH) : Ups to 3 STARS (hold) from 2 STARS (sell)

Analyst: Christopher Muir

We are raising our 12-month target price by $1 to $29 on an increase in our earnings per share (EPS) growth estimates for the next three to five years. We think Boston Private Financial will benefit during this time period from recent acquisitions. Also, its share price has declined 18% since March 31, compared to a rise of 0.9% in the S&P 500 Regional Banks Index. As a result, we now see this company's shares as fairly valued. For 2006, we expect an improved net interest margin, higher earning assets, improved efficiency ratio, and growth in noninterest income. Our 2006 and 2007 EPS estimates remain $1.71 and $1.90.

Devon Energy (DVN) : Ups to 4 STARS (buy) from 3 STARS (hold)

Analyst: Charles LaPorta

The oil and gas exploration and production sub-industry has declined significantly during the past couple of months, primarily due to historically high seasonal natural gas storage levels resulting in natural gas price declines. We endorse Devon Energy's recently announced $2.2 billion cash purchase of Barnett Shale property, pending needed approvals, in our view reinforcing its dominance in the play.

ValueClick (VCLK) : Reiterates 4 STARS (buy)

Analyst: Scott Kessler

ValueClick says it has repurchased 5.7 million shares for $85.6 million since its May 8 announcement of a $100 million increase to its stock buyback program. ValueClick also announces an additional $50 million increase to the program. As of March 2006, ValueClick had some $260 million in cash and investments, and no debt. Despite a modest rebound last week, shares are still 22% lower than their mid-April level. We think they are attractive given our view of ValueClick's participation in the continuing growth of online advertising and marketing, the new eBay (EBAY) AdContext opportunity, and ValueClick's below-peer price-to-earnings and price-to-earnings-to-growth.

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