S&P Cuts Dean Foods, Lifts MGM Mirage

Plus: Analyst opinions on Prudential Financial and Williams Cos.

Dean Foods (DF)

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

Analyst: Thomas Graves-CFA

Before special items, first quarter EPS of about 47 cents vs. 40 cents tops our estimate by one cent. This excludes a 3 cents benefit from a customer settlement. However, we expect a near-term supply glut for organic milk, rising costs for traditional milk, and higher debt after a recapitalization will lead to weaker profit comparisons in remainder of 2007. We are lowering our 2007 EPS estimate to $1.70, including the 3 cents from settlement, from $1.77. We are reducing our target price to $31 from $34, which reflects our view that the stock should trade at a p-e modestly below peer-group average.

MGM Mirage (MGM)

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

Analyst: Raymond Mathis

MGM reports first quarter continuing EPS of 55 cents vs. 48 cents, above our 52 cents estimate. Revenue grew 9% as hotel revenue per available room rose 9% while gaming increased 4%, largely on the reopening of the Beau Rivage. We believe gaming revenue trends will begin to improve at Las Vegas properties as construction projects are completed. We are raising our 2007 EPS estimate by 3 cents, to $2.26. Also, our 12-month target price, based on revised discounted cash-flow and price-to-earnings analysis, edges up to $66 from $65. After falling 13% from their 52-week high, we now view the shares as fairly valued.

Prudential Financial (PRU)

Maintains 5 STARS (strong buy)

Analyst: T. Shafi

First quarter operating EPS of $1.85 vs. $1.36 exceeds our $1.64 estimate, as all divisions showed better-than-expected results. Earnings at the investment division rose on higher fee income and strong results from financial advisory segment. The international division benefited from solid business growth and improved net investment spreads. Reflecting first quarter results, we are raising our 2007 operating EPS estimate by 21 cents to $7.16. We are boosting our 12-month target price from $106 to $116, 2.5 times our 2007 book value forecast (excluding other comprehensive income), above historical multiples.

Williams Cos. (WMB)

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

Analyst: M. Kay

The downgrade is based on valuation. First quarter operating EPS at 29 cents before items vs. 26 cents, misses our 34 cents estimate on rising operating costs and lower realized natural gas prices than we projected. Production rose 25%, above our forecast, to 891 MMcfe/day, while realized natural gas prices climbed 13% to $5.32 per Mcf, weaker than projected. We are lowering our 2007 estimate by 5 cents to $1.30, on the shortfall to our first quarter estimate. Our 12-month target price stays at $32. We continue to like the company's inventory of drilling prospects and pipeline projects, but with limited upside to our target, our opinion is hold.

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