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

Author:: TSC Staff
Publish date:: Dec 21, 2001 9:26 AM EST

Updated from 8;30 a.m. EST

Second Edition

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Advance Auto Parts(AAP / NYSE)
Credit Suisse First Boston
Initiating coverage with a Buy rating and a $60 price target. Advance combines superior management, significant upside, and clear margin expansion opportunities, which should all lead to the strongest EPS growth in this Sector through the next 5 years.

American Healthways (AMHC / Nasdaq)
JP Morgan Chase & Co.
UPGRADING from long term buy to BUY, Maintain 12-month $48 PT. sold off 19% yesterday on 1Q02 results; earnings beat ests ($0.10A vs. $0.09E); revs light at $24.5 MM vs. $26.6MM ests. Rev shortfall due to timing of contract roll-outs and health plan member attrition; not deterioration in business model.

Alamosa Holdings(APS / Nasdaq)
Bank of America Montgomery
Initiating coverage with a Buy rating and $19 price target.

Artesyn Technologies Inc (ATSN / Nasdaq)
Lehman Bros
Initiating coverage with a Market Perform rating. We like the company's long-term prospects, but its customers are currently struggling.

Activision (ATVI / Nasdaq)
Deutsche Banc Alex Brown
Initiating coverage with a Strong Buy rating and $36 price target. We believe the company will continue to solidify its number two position in the video game development space.

Cephalon (CEPH / Nasdaq)
Credit Suisse First Boston
Initiating coverage with a Strong Buy and a price target of $90.

Cognos Incorporated (COGN / Nasdaq)
Goldman Sachs
Raising target to $27.50 from $25.50 ahead of 3Q results. IT spending remains challenging. Focus on high ROI-generating products is a positive. Reiterate Outperform.

Cognos Incorporated (COGN / Nasdaq)
Deutsche Banc Alex Brown
Upgrading from Market Perform to Buy, with a $25 price target. We believe the company's momentum from the November quarter will carry through 2002, when the company should earn $0.41 per share.

Cognos Incorporated (COGN / Nasdaq)
Morgan Stanley Co.
Upgrading from Neutral to Outperform, with a $27 price target. We believe the fundamental improvement seen in the November quarter will continue in the near-future.

Rockwell Collins (COL / NYSE)
Credit Suisse First Boston
Initiating coverage with a Buy rating, and $22 price target reflecting our sum-of-the-parts valuation.

Electronic Arts (ERTS / Nasdaq)
Deutsche Banc Alex Brown
Initiating coverage with a Buy rating and $75 price target. We are establishing our estimates for this sector leader above the current consensus.

Gap (GPS / NYSE)
Prudential Securities
changing our rating to HOLD from SELL; stock down 19% since late November and bad news has been incorporated

Metro One Telecommunic. (MTON / Nasdaq)
Credit Suisse First Boston
Changed rating to Hold

Network Associates (NETA / Nasdaq)
Piper Jaffray
Initiating coverage with Strong Buy and $36 target. Upside with McAfee today and Sniffer tomorrow.

Paychex (PAYX / Nasdaq)
Credit Suisse First Boston
Initiated coverage with a Hold rating.

AirGate PCS (PCSA / Nasdaq)
Warburg Dillon Read
Initiating coverage with a Strong Buy and a price target of $90. Airgate PCS operates as Sprint PCS affilate with liscense rights for 14.6 million POPs. Believe that management team has proved itself up to now and will do so in the future, and as a result represent an attractive investment.

Principal Financial(PFG / Nasdaq)
Lehman Bros
Initiating coverage with a Market Perform rating, based on valuation.

SBC Communications (SBC / NYSE)
Piper Jaffray
Initiating coverage with Neutral rating and $36 target. Business will be impacted by rising unemployment and reduced household discretionary income.

Smith International (SII / NYSE)
Deutsche Banc Alex Brown
Initiating coverage with a Buy rating and $70 price target.

THQ Incorporated (THQI / Nasdaq)
Deutsche Banc Alex Brown
Initiating coverage with a Buy rating and $62 price target.

THQ Incorporated (THQI / Nasdaq)
Goldman Sachs
Initiate coverage with Recommended List rating and $65 target. Positioned well in current videogame cycle with WWF brand and others. Strong balance sheet, no debt.

U.S. Bancorp (USB / NYSE)
Warburg Dillon Read
Raising investment opinion to Strong Buy from Buy. Starting from the fourth quarter, management indicated that the company is poised to deliver a higher quality earnings stream less clouded by restructuring and other special charges.

Western Digital Corp. (WDC / NYSE)
JP Morgan Chase & Co.
UPGRADING from long term buy to Buy, raising 12-mo. PT from $5 to $8 (.7x sales) after co preann to the upside last night.We have more confidence in share shift, capacity. We believe cycle is at bottom.

Women First HealthCare (WFHC / Nasdaq)
Warburg Dillon Read
Initiating coverage with a Buy rating and a $13 price target. Key drivers in the near-term are Esclim and Midrin. WFHC is in the position to experience significant top and bottom-line growth in the coming years.

West Corporation (WSTC / Nasdaq)
Credit Suisse First Boston
Initiating coverage with a price target of $32 per share and a Buy rating.

AmerisourceBergen Corp. (ABC / NYSE)
Lehman Bros
The resignation of the company's CFO was not a complete surprise, although it came sooner than some had expected. Maintain Strong Buy rating.

Accredo Health (ACDO / Nasdaq)
Lehman Bros
Raising estimates and price target to $43 per share, based on a small accretive acquisition. We now expect the company to earn $1.30 in 2002.

Accenture (ACN / NYSE)
Lehman Bros
Raising price target to $30 per share, after the company raised EPS guidance.

American Eagle Outfitters (AEOS / Nasdaq)
Robertson Stephens
Lowering estimates for 2001 to $1.42 from $1.48 and 2002 to $1.56 from $1.77. Limited downside at $23. Target $32. Reiterate Buy.

American Electric Power (AEP / NYSE)
Morgan Stanley Co.
Cutting estimates to reflect warmer weather. Maintain Neutral rating.

Amgen (AMGN / Nasdaq)
Dain Rauscher
Initiaties Phase III trial for AMG 073, no changes to estimates,maintain Buy rating.

Amphenol Corporation (APH / NYSE)
Morgan Stanley Co.
Trimming 2002 estimate to $2.35 per share, because of weaker expected sales.

Bed Bath & Beyond (BBBY / Nasdaq)
NEWS
reported 3Q EPS in-line with the Street estimate of 18c per share. The company also said it sees 4Q EPS in-line with the current Street estimate of 26c per share. Net earnings for 3Q of 2001 were $53.0 million, net sales $759.4 million.

Carnival Corporation (CCL / NYSE)
Deutsche Banc Alex Brown
November quarter earnings were ahead of expectations, based on higher passenger yields. Raising our fiscal 2002 estimate to $1.35 per share. Reiterate Buy rating and $29 price target.

Carnival Corporation (CCL / NYSE)
Lehman Bros
Lowering 2002 estimate to $1.34 per share, but raising our price target to $30. Maintain Buy rating, as cost controls should mitigate pricing pressures.

Cephalon (CEPH / Nasdaq)
Bank of America Montgomery
Raising estimates and price target to $85 per share. New sales and marketing joint venture should help sales of Provigil and Gabitril.

ChevronTexaco(CVX / Nasdaq)
Deutsche Banc Alex Brown
Raising full-year EPS estimate to $6.90, based on higher than expected natural gas production. Maintain Market Perform rating.

Citigroup (C / NYSE)
NEWS
close to cementing a bid for most of ENE (pipelines) flagship energy-trading operations, giving the beleaguered energy company some reason for optimism as it prepares for a bankruptcy-court auction of the unit, according to the Wall Street Journal.

Citigroup (C / NYSE)
Deutsche Banc Alex Brown
Assuming the Travelers IPO and spin-off are completed in 2002, we are modeling for a $0.05 per share effect on earnings. Maintain Strong Buy rating.

eBay (EBAY / Nasdaq)
Merrill Lynch
Raising fourth quarter EPS estimate to $0.15, compared with the $0.12 consensus. Management will also likely raise 2002 guidance on its next earnings release. Reiterate Buy rating.

Exelon Corporation (EXC / NYSE)
Deutsche Banc Alex Brown
The purchase of two generation plants from TXU will be accretive by $0.05 per share in fiscal 2002. Maintain Market Perform rating.

Golden West Financial (GDW / NYSE)
JP Morgan Chase & Co.
recommend buying into strong Q with good upside driven by higher margin. Raised Q4 from $1.34 to $1.38.

General Motors Corp. (GM / NYSE)
Warburg Dillon Read
Raising 2002 and 2003 EPS estimate to $1.00 and $2.65. GM's earnings are likely to fare better than their rivals, due to their higher margin segments.

Global Payments (GPN / NYSE)
Goldman Sachs
Raising 2002 (May) EPS by 3c to $1.21 (up 4% Y-Y) for 2c better than expected 2Q results and 1c for higher rev in 2H02. Raised 2003 EPS 6c to $1.40 (up 16% Y-Y). Reiterate Outperform.

Goldman Sachs Group (GS / NYSE)
Salomon Smith Barney
Reported 4Q01 EPS of 93c vs. concensus of 90c and our est. of 83c. Rev. lower than est., upside driven by lower compensation/ net revenue ratio and lower tax rate. Reiterate Buy and $105 target.

Goldman Sachs Group (GS / NYSE)
Morgan Stanley Co.
Raising estimates and price target to $95 per share. Maintain Outperform rating.

Gillette Company (G / NYSE)
Prudential Securities
lowering 4Q Duracell sales and margin estimates because of discounting. Duracell sales will decline 6% (vs. earlier 2% decline) and that margins will fall to 10% (from earlier 11.5% estimate) and 17.6% a year earlier. Equates to lower Gillette sales. Revising G sales to 2.8% decline from 1.5% decline.Stock is still too risky. reit hold.

Jabil Circuit (JBL / NYSE)
Deutsche Banc Alex Brown
Cutting estimates to reflect management's new guidance. Our EPS expectation of $0.43 is below the company's new range of 50-60 cents. Maintain Market Perform.

Jabil Circuit (JBL / NYSE)
Lehman Bros
Reducing estimates to match the company's new guidance. Maintain Buy rating, as the shares look attractive for the long-term below $20.

Juniper Networks (JNPR / Nasdaq)
Goldman Sachs
Lowered guidance to 5c EPS vs our 10c. Cited tightening of carrier capex. Well positioned. Can manage during a slowdown. Reiterate Recommended List rating.

J.P. Morgan Chase & Co. (JPM / NYSE)
Lehman Bros
Cutting full-year estimate to $1.75, to reflect Enron losses. Maintain Strong Buy rating.

J.P. Morgan Chase & Co. (JPM / NYSE)
Morgan Stanley Co.
The company's exposure to Enron appears to be more than we had previously expected. Maintain Neutral rating.

J.P. Morgan Chase & Co. (JPM / NYSE)
Piper Jaffray
Lowering estimates for 2001 from $1.93 to $1.72, 2002 from $3 to $2.77 and 2003 from $3.50 to $3.40. Weaker commercial credit quality trends and Enron exposure. Reiterate Outperform and $50 target.

Liberate Technologies (LBRT / Nasdaq)
NEWS
reported a 2Q loss of 6c/sh, while revenues jumped 79% from the year-ago level to $21.0M. The estimate was for a loss of 9c/sh. Looking forward, the co. sees a 3Q loss of 6c to 7c/sh. The estimate is for a loss of 8c/sh.

Manugistics Group (MANU / Nasdaq)
Credit Suisse First Boston
Raising 2002 and 2003 EPS estimates to ($0.31) and $0.08 due to stronger than expected close rates, uptick in larger deal sizes, and balanced strength across 7 verticles, including high-tech.

Marriott Int'l (NEW) (MAR / NYSE)
Lehman Bros
Reiterate Strong Buy rating, with a $50 price target.

Mirant Corporation (MIR / NYSE)
Deutsche Banc Alex Brown
Trimming estimates to $2 per share in 2001 and $2.10 for next year, because of dilution from a recent equity offering.

Mirant Corporation (MIR / NYSE)
Morgan Stanley Co.
Cutting estimates to $1.95 per share in 2001 and $1.90 for next year. Maintain Neutral rating.

Mirant Corporation (MIR / NYSE)
Lehman Bros
Lowering price target to $22 per share, but maintaining Strong Buy rating.

Microsoft Corporation (MSFT / Nasdaq)
Dain Rauscher
may be under pressure until the impact of the securityproblem clarifies, but long term we maintain our Buy rating.

Nike (NKE / NYSE)
NEWS
reported 2Q EPS of 48c, 2c better than estimates, and above the 44c/share last year. revenues increased 6% to $2.3 billion, versus $2.2 billion for the same period last year.

Nike (NKE / NYSE)
Lehman Bros
The company announced earnings $0.02 ahead of the consensus. Raising our price target to $70 per share.

Nike (NKE / NYSE)
Morgan Stanley Co.
Raising estimates and price target to $65 per share.

Nike (NKE / NYSE)
Bank of America Montgomery
Raising estimates to $2.42 per share in fiscal 2002 and $2.78 for next year. Reiterate Strong Buy rating and $65 price target.

Northern Trust Corp. (NTRS / Nasdaq)
Warburg Dillon Read
Amidst economic conditions and credit quality concerns, we lowered fourth quarter EPS estimates to $0.55.

Nortel Networks Corp. (NT / NYSE)
NEWS
The company pre-announced weaker sales for the current quarter of $3.4 billion, although the loss of $0.16 was better than previously expected.

Palm (PALM / Nasdaq)
NEWS
will appeal court ruling in favor of Xerox in a case over a patent for handwriting recognition software; Xerox said it had won a patent infringement suit against 3Com and Palm over the Graffiti product

PNC Financial Services (PNC / NYSE)
Warburg Dillon Read
Lowering fourth quarter EPS estimates $0.10 due to difficult economic conditions, credit quality concerns and information from this week's pre-announcements.

Potash Corp./Saskatchewan (POT / NYSE)
Salomon Smith Barney
EPS guidance for 2002 of $2.30 significantly below $3.32 consensus and our $3.20. Lowering 4Q01 EPS to 7c, 2001 to $2.30 and 2002 to $2.30. Reiterate Neutral and $60 target.

Research In Motion (RIMM / Nasdaq)
Dain Rauscher
RIM reported Q3 revenues and EPS slightly below our estimates andlowered near-term guidance.

Research In Motion (RIMM / Nasdaq)
Credit Suisse First Boston
Decreasing 2003 EPS estimates to ($0.13) based on the timing risks associated with shipments to new carrier channels and what we believe will be a back-end loaded 2002.

Southern Company (SO / NYSE)
Deutsche Banc Alex Brown
Cutting 2002 estimate to $1.70 per share, based on lower electric rates. Maintain Market Perform rating.

Weisel Partners (Semi Equipment)
Book-to-Bill increases from 0.72 in Oct to 0.73 as shipmentsfall; Expect Dec to be up again as order stabilize & sales fall.

Lehman Bros (Gaming & Lodging)
Investors should not expect the recent outperformance in this sector to continue much longer. We would buy on dips, as business should normalize by the second half of 2002.

Goldman Sachs (Paper Stocks)
Lowering 4Q01 and 2002 EPS for most US paper and forest products companies. Biggest downward revisions are for BOW and SSCC. Modestly weaker commodity prices for building products and select paper-grades.

Merrill Lynch (Technology)
Unit growth is bottoming, but difficult pricing will cause earnings disappointments in 2002. Computer Services, Data Networking, and Supply Chain firms should outperform the market.

Oscillator: (1.1)

8:30 Gross Domestic Product (3Q F) -1.1%

8:30 GDP Price Deflator (3Q F) 2.2%

10:00 University of Michigan Confidence (DEC F) 85.8

10:00 Personal Income (NOV) 0.2%; Spending -0.9%

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