TheStreet Notes: A Daily Briefing of Wall Street Research and Analyst Actions

Updated from 8:39 a.m. EST

Final Edition NOTE: TheStreet Notes currently is being offered for FREE to all users of TheStreet.com on a trial basis and for a limited period of time only. We expect to make this a premium service in the future. In the meantime, we welcome your comments at [e-mail] TickerWatch Second Edition ACDO AWE BLUE CPB CRA ENE FDX GLM HIG HUM IMMR MCAF MCY MLNM MSFT MUR NAV NBR NCX NE NSM QCOM RBAK SPOT WMGI First Edition ACPW ADP CSGS DISH DTE EBAY EFDS EMC HCA HOMS JNPR KG MCD MIR MO NEM OPWV PAYX PGL SIAL SKYW SLR TKTX

Click Here for the legal disclaimer. Change In Ratings | Stock Comments / EPS Changes | Strategy Calls / Market Calls | Economics | Meetings | View Archived StreetNotes Active Power (ACPW / Nasdaq) Smith Barney Shearson Downgraded from Buy/Speculative to Outperform/Speculative. Slower sequential demand caused by weakening capital spending at commercial and industrial companies leads to decremental margin concerns in the next 6-9 months. New product releases are not expected to impact sales until mid-2003 at the earliest. Active Power (ACPW / Nasdaq) Bank of America Montgomery Initiating coverage with a Market Performer rating. Automatic Data Processing (ADP / NYSE) ABN Amro initiating coverage with a BUY rating, $61 target. ADP, the leading provider of HR services, benefits from high customer retention, high customer switching costs and 90% recurring revenue. We believe that ADP is an excellent defensive play and investor expectations already reflect the current difficult environment. Celera Genomics (CRA / NYSE) Weisel Partners Downgrading from Buy to Market Perform due to lack of near-term catalysts & visibility in its genomics derived drug pipeline. CSG Systems International (CSGS / Nasdaq) Deutsche Banc Alex Brown Lowering estimates and price target, because of reduced revenue visibility. We now expect the the company to earn $2.07 per share in 2001 and $2.05 next year. Maintain Market Perform rating, with a $40 target. CSG Systems International (CSGS / Nasdaq) Robertson Stephens Lowers Guidance as Anticipated, Due to Weak Spending Environment for New Systems. 12-Month Price Target: $30.00. 2001E EPS: $2.06, up from $2.05, 2002E EPS: $1.93, down from $2.20. CSG Systems International (CSGS / Nasdaq) JP Morgan Chase & Co. DOWNGRADING from Buy to long term buy after CSGS rep $0.54/$124m vs our est of $0.53/$123m in-line with st, and lowered 02 guidance. We're lowering 02E from $2.59/$585m to $2.03/$495m inline with lower end of co. guidance. Rating will be reviewed after analyst meeting on Nov. 19. DTE Energy Company (DTE / NYSE) Lehman Bros Downgrading from Strong Buy to Buy, with a $46 price target. Deteriorating fundamentals do not support much more price appreciation from these levels. eBay (EBAY / Nasdaq) Deutsche Banc Alex Brown Analyst meeting was upbeat, and we're maintaining our estimates for 50% annual EPS growth through 2005. Raising 2002 EPS estimate to $0.73, and believe that more upside potential exists. Reiterate Buy rating. eBay (EBAY / Nasdaq) Lehman Bros We remain cautious on the shares, despite the positive analyst meeting. Maintain Market Perform rating. eBay (EBAY / Nasdaq) ABN Amro downgrading EBAY from ADD to HOLD based on valuation and the reduced likelihood of material upside to 2002. The company needs to significantly outperform expectations in order to grow into its multiple and yesterday's investor meeting suggested such upside may not be achievable. eBay (EBAY / Nasdaq) Goldman Sachs Reiterate Recomended List rating. Raising '02 revenue estimates to $1.095b from $1.026b. Maintain above consensus EPS est of $0.75. Encouraged by mgmt's affirmation of $3b in rev by '05, incr confidence & level of detail provided to connect the dots. Raising topline 2002 growth expectation to 50% vs consensus of 42%. eFunds Corporation (EFDS / Nasdaq) Bear Stearns Downgrading to Neutral from Attractive. Posted 3Q01 operating EPS of $0.24, in-line with our estimate. Were it not for a last minute software sale in the third quarter, the company would have missed street consensus. The company lowered guidance for 4Q EPS and full year 02 revenue. Global Marine (GLM / NYSE) ABN Amro Downgrading from ADD to HOLD on valuation. Homestore.com (HOMS / Nasdaq) Goldman Sachs Downgrading to Market Performer from Recommended List. Under analysis HOMS is overly dependent upon ad revenuefor profitability. Concerns for substantial housing turnover slowdown. Real estate online advertising likely to be depressed. Immersion Corporation (IMMR / Nasdaq) JP Morgan Chase & Co. DOWNGRADING from Buy to LTB after co missed the Q, due to weakness in medical and 3D products. We expect stock to be weak. Liquidity issues should arise by mid 02 if no news licence agreements are signed. Juniper Networks (JNPR / Nasdaq) Merrill Lynch Lowering our near-term rating from Accumulate to Neutral, after the stock's recent run. McAfee.com Corporation (MCAF / Nasdaq) JP Morgan Chase & Co. DOWNGRADING from long term buy to market perform on valuation, maintain $24 PT. Operationally McAfee.com has never been stronger, in our view, but shares look fully valued as we wait for next catalyst, we believe shares are fully valued Philip Morris Companies (MO / NYSE) Goldman Sachs Downgraded from Recommended List to Market Performer. We have lowered our 12 month target price to $55-60 from $65. 2001 EPS unchanged at $4.04, 2002 revised down 12% to $4.45. Domesticly profit are challenged by increased retial prices. Internationally profits are expected to temper in key markets. Murphy Oil Corp. (MUR / NYSE) Lehman Bros Raising 2001 estimate to $5.85 per share, because of lower expenses. Maintain Market Perform rating. Murphy Oil Corp. (MUR / NYSE) Warburg Dillon Read Downgrading from Strong Buy to Hold, with an $80 price target. Navistar International (NAV / NYSE) JP Morgan Chase & Co. Adding to the JPM Focus List. The commercial truck market is poised for a sharp recovery in the next several years, in our view. Current industry volumes are roughly 40% "normalized" levels and could recover significantly in better economic environment, the stock could reach $65. Nabors Industries (NBR / AMEX) ABN Amro Downgrading from ADD to HOLD on valuation. Newmont Mining Corp. (NEM / NYSE) Goldman Sachs Reported eps of $0.11 per share versus our $0.02e and consensus of $0.03 yesterday. Expected to meet production targets although they are more challengin than anticipated. Lowering our 4Q earnings estimate by $0.06 per share to $0.09 due to lowered gold price forecasts. Newmont Mining Corp. (NEM / NYSE) Prudential Securities Upgrading to Hold from Sell, our price target to $21 from $15 and our earnings estimates from a loss of $0.31 to a loss of $0.08 for 2001, from a loss of $0.31 to a loss of $0.06 in 2002, to a profit of $0.30 from $0.15 for 2003, from $0.70 to $0.91 in 2004 and from $0.88 to $1.08 in 2005 because mines performed better than expected; cost controls were impressive and (4) a tax credit rather than provision occurred. Newmont Mining Corp. (NEM / NYSE) Morgan Stanley Co. Cutting estimates, despite strong third quarter results. We now expect the company to earn $0.22 per share is 2002. Maintain Neutral rating. Noble Drilling Corp. (NE / NYSE) ABN Amro Downgrading from ADD to HOLD on valuation. Openwave Systems (OPWV / Nasdaq) Bank of America Montgomery Lowering estimates and price target to $9 per share. Maintain Buy rating, as we believe the company's business is gaining strength overall in this weak market. Openwave Systems (OPWV / Nasdaq) Goldman Sachs Downgraded from Market Outperform to Market Perform. Reported 1QFY02 revs of $117.2mn and loss per share of $0.03, in line with preannounced results and slightly better than our $115mn/$0.04 revised estimates. Due to sluggish near term sales markets return to profitability not expected until 3QCY02 (Sept). Openwave Systems (OPWV / Nasdaq) ABN Amro We are lowering our price target from $8-$10 to $6-$8 and reducing our fiscal 2002 EPS estimate from ($0.09) to ($0.21). Given the poor quarterly results and our projected lack of sales growth for the next few quarters, we believe that OPWV's stock will come under near-term pressure. Openwave Systems (OPWV / Nasdaq) Morgan Stanley Co. Cutting estimates to losses of $0.46 per share this year and $0.28 in fiscal 2003. Maintain Neutral rating, although we believe the company is taking the right steps. Openwave Systems (OPWV / Nasdaq) Credit Suisse First Boston Downgrading from Strong Buy to Buy, with a $15 price target. Paychex (PAYX / Nasdaq) ABN Amro initiating coverage with a HOLD rating, 2002 EPS estimate of $0.77 and 2003 EPS estimate of $0.92. In our view, PAYX currently faces the prospect of slowing growth within its core payroll processing business due to the economic slowdown and reduced "float" income as interest rates have fallen. Sigma-Aldrich Corporation (SIAL / Nasdaq) Bank of America Montgomery Upgrading from Market Performer to Buy, based on valuation. We believe the company can post double-digit growth off of weak comps next year, and the stock can reach $47 per share. Solectron Corporation (SLR / NYSE) NEWS SLR announced that it was affirming its financial guidance for the first quarter of 2002, but said full-year sales are likely to be below previous guidance. "For our first quarter, which ends Nov. 30, we continue to expect sales of $2.8 billion to $3.2 billion and cash earnings per share* of 4 to 8 cents. Solectron Corporation (SLR / NYSE) JP Morgan Chase & Co. DOWNGRADING from Buy to long term buy, lowering 02E from $15B/$0.66 to $14.4B/$0.46. Analyst day disappointing, no guidance beyond current Q. We see limited downside, but much more subdued possibility for upside. Solectron Corporation (SLR / NYSE) Bank of America Montgomery Cutting estimates and price target to $20 per share. back to top Accredo Health (ACDO / Nasdaq) Weisel Partners Strong Sept Q; Increasing est; Pipeline of new products promising, in our view; Reiterate Buy. AT&T Wireless Services (AWE / NYSE) Goldman Sachs Lowering price target to $21 from $27 based upon more conservative valuation. Blue Martini Software (BLUE / Nasdaq) Dain Rauscher Blue Martini announced the appointment of Michael Borman (formerly a VP at IBM) as president and COO. Campbell Soup Company (CPB / NYSE) NEWS The company raised its fiscal first quarter earnings guidance to $0.40-$0.42 per share, from $0.33-$0.36. Management also maintained full-year expectations of $1.30. EchoStar Communications (DISH / Nasdaq) Deutsche Banc Alex Brown We believe the GMH purchase is a net positive, given the deal passes FTC regulations. Reiterate Strong Buy rating, and we believe our $50 price target is conservative, with the potential for operating synergies. EMC Corporation (EMC / NYSE) Bear Stearns Announced Open Software Plans; Key Issues Remain Narrowing Product Differentiation And Tough Competitive Environment; Maintaining Estimates And Neutral Rating EMC Corporation (EMC / NYSE) Dain Rauscher EMC's outlook for 2002 may be murky, but the long-term strategy seems clear -- software, service, and SANs. Enron Corp. (ENE / NYSE) JP Morgan Chase & Co. ENE continues to underperform in the capital markets, but there is scant evidence of business impairment. Liquidity, especially short term, is not an issue, in our view, but stabilization and recovery in the debt markets are key. FedEx Corporation (FDX / NYSE) Morgan Stanley Co. Raising estimates and price target to $50 per share. We now expect the company to earn $2.70 per share, following its positive November quarter results. HCA (HCA / NYSE) Merrill Lynch Reiterate Buy rating, and placing the company on our Focus 1 list. We have confidence in our estimates through 2002, as the fundamentals in the hospital industry continue to improve. Hartford Financial Svcs. (HIG / NYSE) Lehman Bros We believe the stock will be moderately lower today, as the company reduced its 2002 earnings guidance to $4.65-$4.95 per share. Humana (HUM / NYSE) Morgan Stanley Co. Raising estimates to $0.69 per share in 2001 and $0.85 for next year. Maintain Neutral rating. King Pharmaceuticals (KG / NYSE) Goldman Sachs Yesterday, King reported 3Q01 EPS of $0.28, up 33.3% Y/Y. This was a penny above our estimate and two cents above consensus. Raising our 2001 EPS estimate to $1.03 from $1.02. Continue to rate King a Market Outperformer. McDonald's Corporation (MCD / NYSE) Deutsche Banc Alex Brown Lowering 2002 estimate to $1.48 per share, despite management's higher guidance. Maintain Strong Buy rating. McDonald's Corporation (MCD / NYSE) Bank of America Montgomery Lowering estimates again, to reflect decrease in management's guidance. We now expect the company to earn $1.45 next year, despite the company's new $5 billion share repurchase program. McDonald's Corporation (MCD / NYSE) Bear Stearns Maintain Neutral rating but are reducing 2002 EPS estimate to $1.50 in reaction to the cautious earnings outlook but we suspect that the company is being conservative after a series of estimate misses over the past year. We do not sense that the outlook for McDonald's is worsening but may well be stabilizing. McDonald's Corporation (MCD / NYSE) Smith Barney Shearson Trimming our '02 EPS forecast by $0.04, to $1.50. We reiterate our Neutral rating. McDonald's Corporation (MCD / NYSE) Robertson Stephens Guided 2002 EPS to $1.47?$1.54 versus consensus of $1.54. Reducing 2002E EPS to $1.50, down from $1.58. Mercury General Corp. (MCY / NYSE) Morgan Stanley Co. Increasing estimates, following strong third quarter operating results. We now expect the company to earn $2.65 per share in 2002. Maintain Neutral rating. Mirant Corporation (MIR / NYSE) Deutsche Banc Alex Brown Third quarter results topped expectations by $0.02 per share, and management reaffirmed EPS guidance through next year. Reiterate Buy rating. Millennium Pharmaceutical (MLNM / Nasdaq) Credit Suisse First Boston Restructuring of CAMPATH deal will be beneficial to the company. We're improving our loss expectations to $0.42 per share in 2001 and $0.54 for next year. Microsoft Corporation (MSFT / Nasdaq) Prudential Securities Reiterating Buy Rating and $75 Price Target. MSFT Is Also On The Prudential Securities Select List. Xbox Glitch Fears And PC Market Weakness Once Again Swirled Around MSFT. Xbox Demo Machine Concerns Are Overblown, In Our View. PC Forecasts Sound Bearish But FY02 Desktop Platform Numbers Continue To Look Achievable. NOVA Chemicals Corp. (NCX / NYSE) Morgan Stanley Co. Cutting estimates, as order growth has slowed. We now expect the company to earn $0.50 per share next year. Maintain Outperform rating. National Semiconductor (NSM / NYSE) Lehman Bros Cutting 2002 loss estimate to $1.20 per share, on weak bookings. Peoples Energy Corp. (PGL / NYSE) Goldman Sachs Reported adjusted FY4Q EPS of $0.04 vs ($0.05), modestly below our $0.10 estimates related to weaker commodity prices and midstream earnings. Reducing FY02 EPS est to $3.30 from $3.55 as a result of more conservative gas price assumptions and lower anticipated pension credits resulting from the weaker stock market. QUALCOMM (QCOM / Nasdaq) Credit Suisse First Boston Lowering fiscal 2002 EPS estimate to $1.10, because of lower unit sales. Redback Networks (RBAK / Nasdaq) Dain Rauscher We are incrementally positive on Redback as a key product moves forward in the marketplace. Redback rolled out its new aggregation router, competing against Cisco's 7500 and Juniper's M20. Three customers have moved to field trials, starting modest revenues for the SmartEdge 800 Router. The number of customer trials expands by four to nineteen. The main distinguishing feature of the router is its modular software and its architecture for user-to-network connectivity. SkyWest (SKYW / Nasdaq) Goldman Sachs Reported 3Q profits of $0.23 versus $0.34, less than a penny shy of our estimate. Growth rate and margins will likely return to normal quicker than anticipated. Raising 4Q estimate to $0.25 from $0.15 ($0.22 a year ago). Target price $30 (up from $28). PanAmSat Corporation (SPOT / Nasdaq) Lehman Bros There is no guarantee that the company will be acquired in the DISH/GMH deal, and the price would be in-line with the current value in any case. Transkaryotic Therapies (TKTX / Nasdaq) Deutsche Banc Alex Brown Third quarter sales and loss/share came in better than expected. Replagal should continue to drive revenue growth, especially once its approved for sale in the U.S. Raising price target to $50 per share, and reiterate our Strong Buy rating. Wright Medical Group (WMGI / Nasdaq) Weisel Partners Strong Sept Q; Expect several new product introductions & continued rev growth acceleration in '02; Maintain Buy. back to top ABN Amro (Oil Services & Drilling) Downgrading NBR, ESV, GLM, NE and SDC all from ADD to HOLD because the stocks have reached our near-term price targets. We believe the improvement in the OSX (up 45% over past month) is due to positive data regarding the supply of natural gas, including sequential production declines and shrinking weekly storage injections. While these themes are positive indicators, we feel the stocks have been overbought. Prudential Securities (Retailers) Retailers reported mixed sales result for the third week of October. Some stores, such as JCP and WMT, benefited from the cold weekend weather, which appears to have helped move some fall merchandise. In general, the majority of retailers are tracking their respective plans for the month of October. We recommend TGT, FDO, WMT, KSS, HD, and LOW in the growth area and S and MAY in value. Bear Stearns (Sentiment) Technicals improve, looks like the SPX PUT/CALL under 1.00 was an aberration: Bullish sentiment way down, SPX 22%, NDX 23%, 5 day moving average 66 and 68%. Equity PUT/CALL .67, SPX PUT/CALL 1.82. Deutsche Banc Alex Brown (Newspapers) Third quarter ad results were the worst in 30 years, and this quarter will not be any better. Reducing 2002 industry expectations, as the sales bottom will likely not be formed for another year. JP Morgan Chase & Co. (technical strategy) US equity indices are likely ending the first phase of medium term rally from the Sept 21 lows but we do not look for new price lows in this pullback phase. By late November, we look for another rally as positive 6 mo seasonality starts later this week Interim supports enter at the following: S+P 500 1053 & 1019, NASDAQ Composite 1627 & 1500, and Dow Industrials 9000 & 8718 2000 highs can be secular in nature, the 2000 highs may not be exceeded for years (shorter for DJIA). Deutsche Banc Alex Brown (Financials) We believe yesterday's sell-off, sparked by Argentina concerns, was overdone. Maintain Strong Buy rating on C, and Buy ratings on FBF and JPM. back to top Oscillator: 1.5 10:00 a.m. The Conference Board is slated to releases its October reading on Consumer Confidence. The September reading declined to 97.6. 9:00 a.m. BTM/UBSW Store Sales (Oct 27 week) Same store sales in this group were reported to be up 0.5% in the October 20 week after a flat reading in the October 13 week. 9:00 a.m. Redbook Research (Oct 27 week) will also be released at 9:00 a.m. ET. This same store sales measure was up by 1.4% in the 4 weeks through October back to top MCD Biennial Analyst Meeting (Day 2 of 2) ADBE Analyst Meeting EBAY Analyst Meeting JDSU Shareholder Meeting K Analyst Day TGT Annual Analyst Meeting CPQ Group Luncheon VIA Group Luncheon with Management back to top LEGAL DISCLAIMER: THE INFORMATION IN THESTREET NOTES HAS BEEN COMPILED FROM A VARIETY OF SOURCES. NEITHER THESTREET.COM, REALMONEY.COM NOR ANY OF THE PROVIDERS OF THE INFORMATION MAKE ANY WARRANTIES, EXPRESS OR IMPLIED, AS TO THE RESULTS TO BE OBTAINED FROM USE OF THESTREET NOTES, WHICH IS PROVIDED "AS IS" AND WITHOUT REPRESENTATIONS OR WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED. 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