S&P Keeps Buy on Wal-Mart Shares

Plus: Analyst opinions on JetBlue, Pier 1 Imports, and more

Wal-Mart (WMT)

Reiterates 4 STARS (buy)

Analyst: Joseph Agnese

The company reports February U.S. comparable-store sales up 0.9%, below our 1.9% estimate and Wal-Mart's 1%-2% guidance. The company continued to experience weak sales in home and apparel categories as hardlines were negatively impacted by unfavorable weather. With the company forecasting home and apparel softness through the spring, and with traffic trends in comp-stores down, we are lowering our April-quarter EPS estimate one cent to 69 cents and our fiscal 2008 (ending January) EPS estimate by 2 cents to $3.19. As a result, we are trimming our 12-month target price $1 to $54 on updated discounted cash-flow and p-e analyses.

JetBlue (JBLU)

Reiterates 3 STARS (hold)

Analyst: Jim Corridore

JetBlue appoints former FAA official Russell G. Chew as Chief Operating Officer, and we believe this enhances the company's operations expertise. In our opinion, the company has taken the right steps to recover from the Feb. 14 storms. We believe JetBlue has run into growing pains here, with problems on the new E-190 and service issues impacting public perception. But we think a sustained impact on bookings is unlikely. JetBlue has a good growth strategy, in our view, though risks remain high. We are keeping our 12-month target price of $15, an above-peer-average 35 times our 2007 EPS estimate.

Pier 1 Imports (PIR)

Reiterates 3 STARS (hold)

Analyst: Jim Corridore

Pier 1 reports a February sales increase of 14% in spite of a same-store-sales decline of 8.4%. We had estimated that comps would decline 10%. As a result, we are narrowing our fiscal 2007 (ending February) and fiscal 2008 operating loss per share estimates to $1.52 and $1.02, from $1.59 and $1.04, respectively. Despite our slightly improved outlook, we continue to expect weakness over the next year from competitive pressures and a slowdown in consumer spending. We are maintaining our 12-month target price of $8, 1.7 times book value per share, given our view of the company's potential as an acquisition candidate.

CNET Networks (CNET)

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

Analyst: Scott Kessler

CNET has fallen some 13% from its Feb. 15 high, and we now view it as fairly valued. We continue to think the company faces notable fundamental challenges, in part related to stiff competition from the likes of Internet bellwethers, blogs and start-ups, and traditional media players. Moreover, we think 2007 performance could suffer following significant management turnover over the past year. However, we think CNET has some appealing assets and capabilities. We see the stock as fairly valued following its recent decline. Our 12-month target price remains $8.

Home Properties (HME)

Cuts to 4 STARS (buy) from 5 STARS (strong buy)

Analyst: Royal Shepard

Shares of residential REITs are trading well off highs reached in early February. We expect selling pressure to persist as investors digest signs of a slower economy. In our view, operators will face increased resistance to rent hikes as 2007 progresses. We find Home Properties well positioned in high barrier coastal markets, characterized by restricted supply of new rental units. Even so, we think macro concerns could limit near-term upside for the shares. Based on updated multiple of 21 times estimated 2007 Funds From Operations of $3.25, comparable to peers, we are lowering our target price by $6 to $68.

Mirant Corp (MIR)

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

Analyst: Christopher Muir

We reported several days ago that Mirant's fourth quarter operating loss per share was $0.20. Following a discussion with the company, we have learned that the $0.20 number deducted a double-counted one-time gain. As a result, we are revising our report to operating EPS to $0.40. Additionally, we have adjusted our earnings model that lead to an increase in our 2007 and 2008 EPS estimates to $1.92 and $2.10, respectively, from $1.56 and $1.78. We are raising our 12-month target price by $4 to $45, reflecting our new expectations for faster earnings growth and the new estimates.

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