S&P Picks and Pans: Corning, Chubb, Siemens, MGIC Investment

Analysts' opinions on stocks in the news

Corning (GLW; $26.19)

Maintains strong buy

Analyst: Todd Rosenbluth

GLW posts flat second quarter EPS of $0.32, in line with our estimate, aided by a $0.02 tax benefit. Revenues were lighter, with weaker sales in the telecom segment due to a labor strike at a European customer. However, in our view, sales to support the LCD TV market were robust and should continue to drive results. We are encouraged by GLW's cost control, which led to operating margin expansion. Third quarter EPS guidance is in line with our estimate, though revenues could come in modestly lower as the telecom market exhibits more gradual growth. We will update after GLW's morning call.

Chubb (CB; $49.63)

Maintains strong buy

Analyst: Catherine Seifert

CB posts $1.60 vs. $1.35 second quarter operating EPS, besting our above-consensus estimate of $1.49. Results reflect the impact of share buybacks and improved underwriting results, despite higher catastrophe losses. We are encouraged by the 7% rise in second quarter international written premiums. As per CB's guidance, we are raising our 2007 operating EPS estimate by $0.30 to $5.70, the low end of guidance. Our $65 target price assumes that what we see as this well-managed franchise with a solid balance sheet trades at 1.9 times estimated 2007 book, 11.4 times our 2007 EPS estimate, a slight premium to peers.

Siemens AG (SI; $136.55)

Maintains hold on ADS shares

Analyst: Stewart Scharf

Shares are down over 6% this morning after SI posts June-quarter earnings per ADS of $1.01, vs. $1.52, and agrees to acquire U.S.-based diagnostics company Dade Behring (DADE; $74.70) for $7 billion. SI will also sell its VDO auto parts unit to a German tire maker for near $16 billion. June-quarter sales rose 8% on growth in automation and drives, power generation and medical solutions. Though we believe SI is paying a hefty premium for DADE, we see accretion by fiscal year 2010 (September), as SI boosts its position in healthcare. Blending relative metrics, we are lifting our 12-month target price by $16 to $148.

MGIC Investment (MTG; $48.32)

Downgrade to hold from buy

Analyst: Stuart Plesser

Our downgrade is based on concerns arising from Radian's (RDN; $44.40) second quarter earnings conference call, affecting MTG because the two have agreed to merge, pending necessary approvals. We were disappointed by RDN's results, specifically its exposure to possible further writedowns of its net interest margin securities. But of most concern is news that C-BASS, 46%-owned by MTG, is facing liquidity issues. It is conceivable that MTG would have to fund C-BASS if this worsens. We are reducing our 12-month target price by $8 to $55, equal to our 2007 book value projection.

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