S&P Boosts H&R Block Shares

Plus: Analyst opinions on News Corp., Moody's, and Polo Ralph Lauren

News Corp. (NWS)

Maintains 4 STARS (buy) on Cl. B shares

Analyst: T. Amobi, CFA, CPA

December-quarter EPS from continuing operations of 26 cents, vs. 21 cents, is one cent below our estimate. We see continued solid film segment, progress at Sky Italia, somewhat mixed TV and cable networks results. The company expects completion in second half of fiscal 2007 (ending June) of planned swap of DirecTV (DTV) with Liberty Media accretive to EPS. On what we see as ample financial flexibility, we expect the company to resume buybacks under $6 billion program. The company affirms fiscal 2007 EBIT (earnings before interest and taxes) guidance of 14%-16% growth, $500 million fiscal 2007 revenue target for Fox Interactive. We are raising our target price by $4 to $29 on discounted cash-flow and sum-of-parts valuations.

H&R Block (HRB)

Upgrades to 3 STARS (hold) from 2 STARS (sell)

Analyst: E. Kolb

Ahead of Block's January-quarter earnings announcement, expected in late February, we believe the company's efforts to improve pre-tax season revenues are gaining traction, and that customer retention is higher than last year. We expect Block to maintain similar momentum in fiscal 2008 (ending April) and to increase tax-service revenues about 4%. That said, margins may well compress a notch. We are keeping our fiscal 2007 EPS estimate of $1.21 and introduce our fiscal 2008 estimate of $1.48. We are raising our 12-month target price to $27 from $22, after adjusting our sum-of-the-parts valuation.

Moody's Corp. (MCO)

Maintains 3 STARS (hold)

Analyst: J. Peters, CFA

Before one-time items, the company posted fourth quarter EPS of 64 cents, vs. 50 cents one year earlier, ahead of our estimate by 7 cents. Better than-expected 25% revenue growth contributed to the upside surprise, led by a 31% rise in the structured finance and corporate finance segments. We see a low interest rate environment spurring gains in corporate finance, and an increasing appetite by investors for alternative investments keeping structured finance growth strong despite the U.S. housing slowdown. On a higher revenue outlook, we are raising our 2007 EPS view by 10 cents to $2.58, and our target price $8 to $75.

Polo Ralph Lauren (RL)

Reiterates 4 STARS (buy)

Analyst: Marie Driscoll, CFA

Beating our recently raised December-quarter estimate by 10 cents, Polo Ralph Lauren posts $1.03 vs. 84 cents EPS, as core men's and women's wholesale and retail businesses outperformed expectations and new businesses, and the kids, footwear and jeans businesses were in line. We expect continued sales and earnings momentum to be driven by core and new businesses, as the Polo brand solidifies its premium luxury positioning and provides numerous brand extension opportunities. We are raising our target price by $4 to $94, 20.4 times our calendar 2008 EPS estimate of $4.60, in line with peer luxury goods brands.

U-Store-It Trust (YSI)

Ups to 4 STARS (buy) from 3 STARS (hold)

Analyst: Robert McMillan

Ahead of U-Store-It Trust's fourth quarter results on 2/22, we are projecting per-share funds from operations of $0.23 vs. year-ago $0.15. We anticipate revenues of about $51 million, an increase of 17% from a year ago, driven by gains in both occupancy and rental income. We expect occupancy levels to rise to in the mid-80s percent range, and believe a growing economy, generating more jobs, bodes well for U-Store-It Trust's storage business. We are keeping our 2006 and 2007 FFO estimates at $0.91 and $1.18; we are raising our 12-month target price to $26 from $22, based on revised price/FFO and peer analysis.

Anadarko (APC)

Ups to 4 STARS (buy) from 3 STARS (hold)

Analyst: Tina Vital

Anadarko posts fourth quarter operating EPS of $0.41 vs. $1.44, missing our estimate by $1.03, reflecting increased expenses. Results excluded a $3.81 gain from the sale of its Canadian subsidiary. Acquisitions and strong U.S. onshore volumes boosted oil & gas production by 78%, above our expectations; we expect over 10% growth in 2007. We are cutting our 2007 EPS estimate by $3.70 to $4.13, and see 2008's at $5.57. Blending our DCF and relative valuations, we are raising our 12-month target by $3 to $52, at an expected enterprise value of 7 times our 2007 EBITDA estimate, in line with peers.

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