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

Author:: TSC Staff
Publish date:: Dec 18, 2001 9:12 AM EST

Updated from 8:30 a.m. EST

Second Edition

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Alliance Capital Mgt Hldg (AC / NYSE)
Merrill Lynch
Lowering intermediate-term rating to Neutral from Strong Buy based on valuation. Though we consider AC a pure play Asset Manager, we now see less than 10% ROI potential for 2002. Maintain long-term Strong Buy reflecting favorable scale, diversification, and distribution.

Agere Systems (AGR.A / NYSE)
Goldman Sachs
Initiating coverage with an Outperform rating. Well positioned to emerge a leader. Attractive at current levels. Rangebound near-term.

Amgen (AMGN / Nasdaq)
Bank of America Montgomery
We like the company's decision to buy IMNX, although the deal will likely be dilutive through 2003. Maintain Buy rating.

Amgen (AMGN / Nasdaq)
JP Morgan Chase & Co.
DOWNGRADING from Buy to long term buy after IMNX acquisition because prospect of accelerated earnings growth in 02 has been shelved.

Amgen (AMGN / Nasdaq)
Robertson Stephens
Announced acquisition of IMNX. Makes strategic sense. Target $74. Lowering 2002 EPS by 11c to $1.37.

ArvinMeritor (ARM / NYSE)
Bank of America Montgomery
Downgrading from Buy to Market Performer, based on valuation.

AT&T Wireless Services (AWE / NYSE)
Piper Jaffray
Initiating coverage with Outperform and $18 target.

American Axle & Manufact. (AXL / NYSE)
Bank of America Montgomery
Downgrading from Buy to Market Performer.

Business Objects S.A. (BOBJ / Nasdaq)
SG Cowen
Initiated coverage with a Strong Buy rating and a $44 price target. Ideally positioned to capitalize on key market trends, such as extranet deployments on analytics, analytic applications, and shift from power users to casual users.

E.I. DuPont de Nemours (DD / NYSE)
Merrill Lynch
Upgrading rating from Buy to Strong Buy with intermediate-term price target of $52. With sale of Pharma business, Dupont's balance sheet appears to be in great shape. Only North American chemical company with an AA-debt rating. Stock currently has an attractive 3.3% dividend yield.

Gentex Corporation (GNTX / Nasdaq)
Bank of America Montgomery
Downgrading from Buy to Market Performer, based on valuation.

Inspire Pharmaceuticals (ISPH / Nasdaq)
Dain Rauscher
initiating coverage of Inspire Pharmaceuticals, Inc. with aStrong Buy-Speculative rating and $18 price target.

Leap Wireless Intl. (LWIN / Nasdaq)
JP Morgan Chase & Co.
Initiating with buy, $31 PT. Leap offers a differentiated and extremely simple wireless service, Cricket, offering unlimited calls for $32.95. Performance appears blockbuster, with first year penetration 7%, a level that takes a typical carrier 10 yrs to achieve

Leap Wireless Intl. (LWIN / Nasdaq)
Piper Jaffray
Initiating coverage with Outperform and $27 target. Legitimate shot at broad consumer wireless market.

Millipore Corporation (MIL / NYSE)
Goldman Sachs
Initiating coverage with Market Outperform rating and $72 target. Repositioning itself as a pure-play bioscience company.

Neurocrine Biosciences (NBIX / Nasdaq)
Warburg Dillon Read
Downgrading from Strong Buy to Buy, based on valuation. Lifting our price target ti $62 per share, as the clinical prospects of the company's Insomnia product are still positive.

Northern Trust Corp. (NTRS / Nasdaq)
Merrill Lynch
Lowering Intermediate-Term opinion frm Buy to Neutral and lowering 2001 EPS forecast to $2.15. Weak revenue comparisons in its PFS unit and credit issues relating to handful of credits including Enron drive rating and estimate cut.

Nextel Communications (NXTL / Nasdaq)
Piper Jaffray
Initiating coverage with Neutral rating. Highly leveraged and future unclear.

Sprint PCS Group (PCS / NYSE)
Piper Jaffray
Initiating coverage with Outperform rating and $30 target. Best positioned US wireless carrier.

Pulitzer (PTZ / NYSE)
Merrill Lynch
Initiating coverage with an intermediate-term Neutral. PTZ has significant operating leverage, and stands to benefit disproportionately when an ad recovery finally materializes.

Research In Motion (RIMM / Nasdaq)
JP Morgan Chase & Co.
Downgrading from Long term buy to market perform as we believe co's strategy is growing riskier with the slow roll-out of GPRS-based services and increased competition. stock is trading near fair value.

Roadway Corporation (ROAD / Nasdaq)
ABN Amro
Downgrading from HOLD to REDUCE as the stock has been one of the strongest performers in the trucking universe, soaring roughly 70% since the beginning of the year and increasing over 40% since mid Sept. Their underlying business, however, has notkept pace with its stock price

Stilwell Financial (SV / NYSE)
Merrill Lynch
Downgrading long-term opinion to Neutral from Strong Buy. Currently see less than 20% long-term cumulative fundamental upside following recent strong price performance even after layering in higher 2002 EPS estimates.

Take-Two Interactive (TTWO / Nasdaq)
Piper Jaffray
Upgrading from Outperform to Strong Buy. Raising 2002 by 22c to $1.25. Undervalued. Good risk/reward. Raising target by $4 to $20. Volative and speculative investment.

Take-Two Interactive (TTWO / Nasdaq)
Warburg Dillon Read
Cutting estimates to reflect the company's earnings restatement. We now expect the company to earn $1.35 per share next year. Maintain Hold rating, until we learn more from next month's conference call.

Waddell & Reed Financial (WDR / NYSE)
Merrill Lynch
Raising intermediate-term rating from Buy to Strong Buy due to deep value and accelerating fundamentals. See between 30-35% annualized ROI potential over the next 12 months.

Applied Biosystems Group (ABI / NYSE)
Morgan Stanley Co.
Raised price target to $39, on expectations of relative multiple expansion due to improving visibilty in 2002.

Agco Corporation (AG / NYSE)
Goldman Sachs
Purchase of CAT's farm tractor product. Deal could add 50c to EPS. Raising target to low 20's from $17-18. This is the second upward revision in the past month.

Aztar Corporation (AZR / NYSE)
ABN Amro
Raising target from $18 to $21, our 2001 EPS estimate from$1.28 to $1.31 and our 2002 EPS estimate from $1.28 to $1.31 based on current slot volume and hotel bookings at AZR'sTropicana property in Atlantic City are tracking ahead of our previous projections. Reiterate BUY rating

Bed Bath & Beyond (BBBY / Nasdaq)
Warburg Dillon Read
Raising estimates and price target to $40 per share. Moving our November quarter EPS call to meet consensus, as comps remained strong through this difficult quarter. Maintain Strong Buy rating.

BB&T Corporation (BBT / NYSE)
Lehman Bros
Increased 2002 EPS estimates to $2.85 reflecting accounting adjustments. Forecasting a 13% EPS growth, maintain Buy rating.

Biomet (BMET / Nasdaq)
Bank of America Montgomery
We believe the company will meet or beat our November quarter estimates tomorrow. Reiterate Buy rating and $33 price target.

Coca-Cola Company (KO / NYSE)
ABN Amro
Scheduled to release quarterly estimate of global unit volumegrowth on Wednesday. We estimate 4.6% for 4Q and believe sentiment is in the amount of 4-5% range. However, we expect this will not be significant for the stock. Instead, we believe the focus will be on what is said regarding outlook, especially for 2002 global unit volume growth and earnings.

ConAgra Foods (CAG / NYSE)
Bank of America Montgomery
We expect the company to meet or beat estimates on Thursday. Maintain Buy rating and $30 price target.

Conexant Systems (CNXT / Nasdaq)
Goldman Sachs
Splitting into three independent entities and merging ireless business with AHAA. CNXT preannouced positvely. Raising 2002 by 4c to -$1.29. Reiterate Recommended List rating.

Documentum (DCTM / Nasdaq)
Warburg Dillon Read
Raising estimates and price target to $25 per share. We now expect the company to earn a profit of $0.04 per share in fiscal 2002, because of increased cost controls. Reiterate Buy rating.

Documentum (DCTM / Nasdaq)
Weisel Partners
'02 guidance up 10-14%; Increasing '02 est but remain belowguidance; Valuation rich, in our view.

EchoStar Communications (DISH / Nasdaq)
Salomon Smith Barney
Will be worth alot more if Echostar/Hughes merger goes through. Other mergers are also possible. Target $27. Reiterate Outperform.

eBay (EBAY / Nasdaq)
NEWS
Chief Operating Officer Brian Swette is stepping down after holding the office since 1999. Swette is leaving to spend more time with his family, and will continue at the company as Vice President of Corporate Marketing. Swette's duties as COO will be integrated into other offices.

Electro Scientific Inds. (ESIO / Nasdaq)
Warburg Dillon Read
Raising EPS estimates following blow-out November quarter results. We now expect the company to lose $0.13 in fiscal 2002 and earn a profit of $2.32 for next year. Reiterate Strong Buy rating.

Extreme Networks Inc (EXTR / Nasdaq)
Piper Jaffray
Raising 18-month target by $1 to $16. Reiterate Outperform. Lowering EPS for 2001 by 2c to 53c and 2002 by 5c to 75c based on valuation.

Fluor Corporation (New) (FLR / NYSE)
Bear Stearns
reaffirm Buy rating; BOD announced the ascension of President and COO Alan Boeckmann to Chairman and CEO. Given solid backlog and favorable trends in major markets, Fluor appears well positioned to generate 15%+ EPS growth in 2001-2006 with 20%+ potential for 2002-03. 12-month target $55

General Electric Company (GE / NYSE)
Prudential Securities
reiterate BUY rating and recommend purchase of the stock at present price levels, with a 6-12-month target price of $50 per share. Our price target reflects our shift to our projected reported 2002 EPS of $1.63, up from $1.58.

General Electric Company (GE / NYSE)
NEWS
confirmed earnings forecasts last night. confident GE will hit 2002 financial targets even without economic improvement. As well, the company remains comfortable with 4Q and full year consensus earnings targets of $0.39c and $1.41 per share respectively. GE expects 18% growth in 2002.

General Electric Company (GE / NYSE)
Bank of America Montgomery
Trimming 2002 EPS estimate to $1.55, because of lower pension income. Maintain Strong Buy rating, as all else appears normal from the company analyst meeting.

ITT Industries (ITT / NYSE)
Morgan Stanley Co.
Cut 2002 EPS estimates to $3.50 due to ITT's guidance for 2002 assuming continued economic weakness with no economic recovery until 2003. Believe that growth in the defense and water/wastewater business should offset weakness in other segments. Maintain Outperform rating.

King Pharmaceuticals (KG / NYSE)
Prudential Securities
company reaffirmed previous guidance; raising 2002 EPS estimate from $1.28 to $1.31, driven largely by higher gross margin assumptions and other increased operating efficiencies. Maintain Buy rating and $51 price target.

Kinder Morgan Energy Ptnr (KMP / NYSE)
Lehman Bros
KMP acquires Tejas Gas for $750m. Estimate the acquisition to boost distribution cash flow. Reiterate Strong Buy rating with a price target of $52.

Micron Technology (MU / NYSE)
ABN Amro
maintain HOLD rating ahead of MU's earnings conference callgiven their valuation and continue to believe that MU will post($0.75) versus the consensus estimate of ($0.39). DRAM chip prices have improved recently and this is certainly a step in the right direction as we now believe MU is covering its cash costs of production.

Nova Chemicals Corp. (NCX / NYSE)
Lehman Bros
Due to continued weak trends, decreased fourth quarter and 2002 EPS. Operating rates are currently at their lowest levels in over 20 years, while the benefit of lower energy and feedstock costs is being passed to downstream customers.

Nike (NKE / NYSE)
Salomon Smith Barney
Will report 2Q/02 Nov. EPS on 12/20 after close. Reiterate Outperform and $54 target.

Network Appliance (NTAP / Nasdaq)
Warburg Dillon Read
The company remains our top pick in the storage space, as NTAP is taking advantge of EMC's troubles. Reiterate Strong Buy rating.

Nuance Communications (NUAN / Nasdaq)
Weisel Partners
CFO resigns to move to larger software company; Near-term negative, in our view.

priceline.com (PCLN / Nasdaq)
NEWS
signed a travel marketing alliance with AOL. Priceline's family of travel products will be available across several AOL brands, such as CompuServe, Netscape and Mapquest.

Pegasus Communications (PGTV / Nasdaq)
Salomon Smith Barney
Adjusting esimates. Next qtr up by 8c to -$1.04, 2001 up by 14c to -$5.43 and 2002 down by $3.53 to -$4.72. Target still $12. Downwardly revised guidance. Still well positioned. Reiterate Buy.

Siebel Systems (SEBL / Nasdaq)
JP Morgan Chase & Co.
has had tough Q, but they closed some large deals at end, we expect to come in inline with us $457m/$0.09, and could trade to $30.

Siebel Systems (SEBL / Nasdaq)
Bank of America Montgomery
Raising estimates through 2002, because of higher software demand. We now expect the company to earn $0.55 per share next year. Reiterate Buy rating and $45 price target.

Standard Microsystems (SMSC / Nasdaq)
Robertson Stephens
Strong sequential Nov. rev. growth largely seasonal. Positioned to regain profitability in 2003. Lowering 2002 EPS by 12c to -39c, raising 2003 EPS by 13c to 15c.

USA Networks (USAI / Nasdaq)
Warburg Dillon Read
Reducing price target to $32 per share, as we believe the stock price will be capped by Vivendi's takeover offer. Reiterate Strong Buy rating.

Wells Fargo & Company (WFC / NYSE)
Bear Stearns
reiterate Buy with a price target of $50. We are seeing thefull benefits of the Wells Fargo-Norwest merger, including a doubling of market share in first mortgage originations in California this year, launching WFC to a first place ranking.

Merrill Lynch (Financials)
Continue to believe that financial stocks with relatively low credit exposures should lead the group as an economic recovery takes shape. Broker Dealers' fourth quarter earnings likely will be uninspiring, but lower rates and a stabilizing economy should allow for a solid revenue recovery next year. Favorite Fiduciary stocks are: MEL, BK, FII, and WDR. Money banks like JPM and C presently have compelling valuations.

Bank of America Montgomery (Auto Parts)
Investors should take money out of the sector. Most stocks appear to have already discounted a 2002 recovery. We still like JCI, LEA and SUP.

Bank of America Montgomery (Integrated Oil)
Lowering estimates to reflect weaker commodity prices. We believe XOM offers the best risk/reward in the group.

Lehman Bros (Satellite Communications)
Market has underestimated the early demand response to satellite radio. Suggest investing near term in satellite radio, however dilution and liquidity issues will continue to represent material risk. New 2002 price targets of $15 for Sirus and $21 for XM based on a more tempered demand level.

Deutsche Banc Alex Brown (Sector Strategy)
Plenty of Value in Consumer Discretionary, moving up from underweight to overweight. Moving to underweight for Consumer Staples, due to expected pressure on returns to continue. Considerable value for Energy stocks, consolidation in the group is likely. Underweight Financials, valuation not demanding for global banks. R&D pipeline is getting thinner, moving to underweight. Expect further profit warnings for the Industrials. Overweight Information Tech due to improved competitive advantage. There is great value in Telecoms, especially in the US and Japan. Valuation for Utilities is not demanding, expect good things to come from the Enron bankruptcy.

Oscillator:

8:30 a.m. Housing Starts; Starts 1.535 million; Permits 1.510 million

BTM Chain Store Sales

LJR Redbook

Oscillator: 0.2

General Electric Analyst Meeting

Pfizer Meeting with Analysts

TQNT Analyst Meeting

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