S&P Picks and Pans: Wal-Mart, Intel, Marriott, Citigroup, NetApp

Analysts' opinions on stocks in the news Thursday

S&P REITERATES STRONG BUY OPINION ON SHARES OF WAL-MART STORES (WMT; 51.60):

WMT reports October-quarter EPS of $0.77, vs. $0.69, $0.03 above our estimate. Results benefited from 3.0% growth in U.S. comp-store sales (excluding fuel) and improved inventory management. We continue to believe the company is well positioned to benefit as increased traffic growth in an adverse economic environment leads to marketshare gains. However, on unfavorable forex rates, we cut our fiscal year 2009 (January) and fiscal year 2010 EPS estimates by $0.04 and $0.14, to $3.44 and $3.68, respectively. As a result, we are reducing our 12-month target price by $4 to $61, on updated p-e and DCF analyses. /J.Agnese

S&P MAINTAINS BUY OPINION ON SHARES OF INTEL CORP (INTC; 13.52):

INTC guides fourth quarter sales of $9 billion and gross margin of 55%, lower than prior guidance of $10.1-$10.9 billion and 59%, respectively. INTC sees all-around weaker demand and the PC supply chain reducing inventories. We are cutting our fourth quarter and 2009 EPS estimates by $0.15 and $0.30, respectively, to $0.28 and $1.00. We are also lowering our 12-month target price by $8 to $16. We see the slowdown hurting near-term results, but we believe INTC has good long-term growth potential, as it is one of the best of breed chipmakers and has strong competitive positioning, products and financials. -C. Montevirgen

S&P LOWERS OPINION ON SHARES OF MARRIOTT INTERNATIONAL TO SELL FROM HOLD (MAR; 16.26):

In conjunction with our reiteration this morning of our negative fundamental outlook for the hotel industry, we reduce our 2008 EPS estimate for MAR by $0.05 to $1.60 to reflect the sharp slowdown seen so far in the fourth quarter. For 2009, we now see revenues declining 5% from 2008 and we cut our EPS estimate by $0.20 to $1.20. Our downgrade reflects our view that MAR no longer warrants the slight valuation premium we have historically awarded its shares. On revised 8.5 times enterprise value/EBITDA multiple, we lower our 12-month target price by $3 to $15, below the current share price. -M. Basham

S&P MAINTAINS HOLD RECOMMENDATION ON SHARES OF CITIGROUP (C; 9.53):

According to an unconfirmed report in the Wall Street Journal, Citi may be in talks to acquire Chevy Chase Bank, a privately held federal savings bank with with $14.9 billion in assets and a No. 3 deposit market share in Maryland. Neither company has commented and possible terms have not been suggested by WSJ. Separately, WSJ reports some directors of C are considering replacing Sir Win Bischoff as chairman. We are keeping our $15 12-month target price, equal to roughly 0.83 times book value/share, below Citi's historical average, to reflect our view of uncertainty surrounding future writedowns. -S. Plesser, E. Oja

S&P REITERATES HOLD OPINION ON SHARES OF NETAPP INC (NTAP; 10.39):

NTAP reports October-quarter operating EPS of $0.17, vs. $0.20, above our $0.15 estimate. While we believe NTAP's market-share initiatives will help fend off competitors, we expect a weak pricing and order environment amid the economic slowdown. As a result, we are cutting our operating EPS projections by $0.17 to $0.67 for fiscal year 2009 (April) and by $0.38 to $0.68 for fiscal year 2010. We are also reducing our 12-month target price by $5 to $12 on lower peer valuations. Our target price blends a revised peer-premium p-e of 16.2 times our fiscal year 2010 forecast with our DCF analysis yielding $13. -R. Khalid, CFA