StreetNotes: A Daily Roundup of Street Research
CHANGE IN RATINGS
Applebee's
estimates cut at Bear:Bear said it is cutting its 2005 estimates on APPB by 11 cents to $1.36 a share due to disappointing comp numbers and guidance. Maintained Outperform rating.
Applebee's
downgraded at Piper: Piper said it is downgrading APPB to a Market Perform rating as weak fundamentals are likely to continue.
Peabody Energy
downgraded at Merrill:BTU was downgraded from Buy to Neutral, Merrill Lynch said. Valuation call, though the company should continue to execute well for the remainder of 2005. Stock is already up more than 60% on the year.
Cracker Barrel
downgraded at Piper:Piper said it is downgrading CBRL to a Market Perform rating. High gas prices could pose an obstacle as CBRL's earnings have a very high sensitivity to comp numbers.
Expedia
rated new Hold at Citigroup:EXPE was initiated with a Hold rating and $23 price target, Citigroup said. Valuation appears reasonable, though organic sales growth will at best be in the high single-digits.
Myriad Genetics
upgraded at Merrill:MYGN was upgraded from Neutral to Buy, Merrill Lynch said. $24 price target. Predictive medicine continues to grow, and a 7% price increase is coming next year.
Office Max
upgraded at CSFB:CSFB said it is upgrading OMX to an Outperform rating due to higher confidence that the company will either be broken up or new management will fix execution issues.
RF Micro Devices
upgraded at Lehman:RFMD was upgraded from Equal-weight to Overweight, Lehman Bros. said. $9 price target. Recent market share gains from NOK and MOT bode well for the company's near-term results.
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Scientific Games
rated new Buy at BofA:SGMS was initiated with a Buy rating, Banc of America said. $36 price target. Company is the dominant supplier of lottery tickets, and has three major growth drivers.
Semtech
downgraded at CIBC:SMTC was downgraded from Outperform to Sector Perform, CIBC said. Price competition is heating up in the handset business, and the notebook business has also been disappointing.
Universal Amer. Financial
rated new Neutral at BofA:Coverage of UHCO was started with a Neutral rating and $23 price target, Banc of America said. Company trades at a substantial premium to its life insurance peers, though in-line with the HMO industry.
Verizon
upgraded at Wachovia:VZ was upgraded from Underperform to Market Perform, Wachovia said. Valuation call, though the company's fiber offering still isn't cost-effective.
Westcorp
downgraded at Friedman, Billings:WES was downgraded to Market Perform, Friedman, Billings Ramsey said. Stock likely already pricing in potential business combination.
WFS Financial
downgraded at Friedman, Billings:WFSI was downgraded to Market Perform, Friedman, Billings Ramsey said. Stock is already likely pricing in combination with WES.
STOCK COMMENTS / EPS CHANGES
Allmerica
estimates boosted at Citigroup:AFC estimates raised through 2007, according to Citigroup. Business sale was a good idea, and removes a lot of uncertainty from the model. Hold rating and $42 price target.
Alltel
estimates cut at BofA: AT estimates reduced to $3.46 a share in 2005 and $3.82 for next year, Banc of America said. Numbers reflect combination with WWCA, though the current valuation remains attractive. Buy rating and $70 price target.
Corinthian College
estimates lowered at UBS: COCO 2005 estimate cut to 75 cents a share, UBS said. Earnings re-statement will also have future impact. Neutral rating and $14 price target.
Freddie Mac
estimates cut at Merrill: FRE estimates lowered to $6.46 a share in 2005 and $7 for next year, Merrill Lynch said. Core portfolio growth will likely slow this quarter. Buy rating and $82 price target.
Goodrich
estimates raised at Goldman: GR now expected to earn $2.40 a share next year and $2.60 for 2007, according to Goldman Sachs. OE sales are rising, and the company continues to see strong aerospace demand. In-Line rating.
St. Joe
estimates, target raised at Morgan Stanley: Shares of JOE now seen reaching $74.50, according to Morgan Stanley. Estimates also increased, as the company is realizing higher sales and margins in its Towns/Resorts division. Equal-weight rating.
Carmax
estimates raised at Goldman: KMX estimates raised through 2006, Goldman Sachs said. Company pre-announced solid quarter, led by expense controls and favorable pricing from the auto-makers. In-Line rating.
MGIC Investment
target price cut at Bear: Bear said it is cutting its target price on MTG to $7l.
Nationwide Financial
estimates upped at Goldman: NFS estimates boosted to $3.68 a share in 2005 and $3.90 for next year, Goldman Sachs said. Company's competitive position is improving, and share repurchases should add to the bottom line. Underperform rating.
