S&P Picks and Pans: Altria, Coca-Cola, Tiffany, Cablevision, Abbott
S&P REITERATES STRONG BUY OPINION ON SHARES OF ALTRIA GROUP
MO reports third quarter EPS of $1.24. Before tax benefits and asset impairment charges, operating EPS of $1.21 vs. $1.07 easily beat our $1.12 estimate. Results benefited from revenue growth on market share gains in the U.S. and from acquisitions and currency benefits internationally. The company boosted its 2007 EPS guidance to $4.20-$4.25, now matching our $4.25 estimate. With the spin-off of MO's international operations likely to be announced in early 2008, we are maintaining our sum-of-the-parts analysis-derived 12-month target price of $85. /R. Mathis
S&P REITERATES BUY OPINION ON SHARES OF COCA-COLA CO.
KO reports third quarter EPS of 71 cents vs. 62 cents, topping our 67 cents estimate on stronger-than-expected international results. Revenues rose 19% on a 6% increase in sales of concentrate, positive currency impact, and acquisitions. With what we view as a more aggressive push to increase volumes in the U.S., and the introduction of new products overseas, we see these benefits continuing into 2008. We are raising our 2007 EPS estimate by 9 cents to $2.64, and our 12-month target price by $9 to $67, which at about 23 times our 2008 EPS estimate of $2.95, is a discount to peer average. /R. Mathis
S&P REITERATES STRONG BUY RECOMMENDATION ON SHARES OF TIFFANY & CO.
At this morning's meeting in its new Wall Street store, TIF also detailed a planned smaller 2,000 square foot format for U.S., tentatively called Tiffany & Co. Collections. With first opening planned for 2008, TIF sees potential for 70 stores besides the original 100 target for 5,000 sq. ft. U.S. units. We like the new format for higher potential economic returns, but do not expect impact on near-term results. We believe TIF business continues to be strong here and internationally and are encouraged by LVMH Moet's report Monday of accelerated sales in Japan, a key TIF market. /E. Kwon, CFA
S&P MAINATAINS HOLD OPINION ON SHARES OF CABLEVISION SYSTEMS CORP.
In proxy filing, Dolan family says "emphatically" it will not modify its pending buyout offer at $36.26 per share in cash. Already approved by directors, the Dolan proposal has drawn opposition from Institutional Shareholder Services, and growing dissent from key holders, mainly on valuation. While mildly surprised by the latest Dolan stance in a continued elusive going-private bid, we think confluence of recent events make it highly unlikely the deal would pass shareholder vote, set for Oct. 24. We maintain 12-month target price of $38, on projected enterprise value to EBITDA. /T. Amobi, CPA, CFA
S&P MAINTAINS BUY OPINION ON SHARES OF ABBOTT LABORATORIES
Third-quarter operating EPS of 67 cents vs. 58 cents meets our estimate and beats the high end of guidance by one cent. Revenues modestly exceeded our estimate, as $803 million of global Humira sales beat our $780 million view. Diabetes product sales were also strong, and we believe the Niaspan compound is gaining share in cholesterol and triglyceride lowering categories. We think the shares have been restrained recently by concerns over Xience stent safety data, but we think Xience will capture significant U.S. share in 2008. We keep our 2007 EPS estimate at $2.83, 2008's at $3.28, and target price at $65. /R. Gold