The following companies are subjects of research reports issued recently by investment firms. Many of the reports may be purchased from Thomson Financial Securities Data, at 888-989-8373 or www.tsfd.com, or are available through Dow Jones Interactive. Share prices at the time the report was issued and the date of the report are in parentheses.
by Lehman Brothers (31, Aug. 1)
Alcoa looks cheap trading at half the market multiple considering its faster-than-market EPS growth prospects of near 20% for the next few years. Maintain Buy rating.
by Bear Stearns (96 9/16, Aug. 3)
Cigna currently trades at 12.8 times our 2001 EPS versus an average of 16.5 times for our narrowed universe of the larger, better-positioned players -- a 32% valuation discount with a similar long-term EPS growth outlook. We reiterate our Buy . With a lower risk profile and among the highest-quality financial measures in the sector, we believe it stands out with under-recognized strength.
by J.P. Morgan (12 13/16, Aug. 7)
We are downgrading to a Market Performer from a Long-Term Buy based on the announcement that Dial's board has ousted its CEO and CFO, and that it expects to miss consensus estimates for the second half of 2000. On a preliminary basis we are cutting our third-quarter estimate to 10 cents [a share] from our previous 21 cents, and cutting our full-year 2000 estimate to 55 cents from our previous 77 cents.
by PaineWebber (77 3/16, Aug. 8)
Attractive . Announced a definitive agreement to acquire 1,700 megawatts of unregulated power-generation capacity in central New York. This purchase is in line with management's well-stated goal of accretively expanding the scope and geographic/fuel-type diversity of its generation portfolio. Management believes this purchase could be accretive to its 2001 EPS by roughly 10-15 cents. Though we are still working on fine-tuning our projection model, we are now more comfortable raising our 2001 EPS estimate. We are raising it to $3.15 from $3.05 (the Street consensus is $3.09, reflecting a range of $3.00-$3.25). We would expect Street estimates to edge higher as others fine-tune their assumptions for this purchase.
Four Seasons Hotels
by PaineWebber (71 1/2, Aug. 4)
Attractive . We are increasing our 2001 EPS estimate by C10 cents to C$3.60 (plus-22%) as it exceeded our second-quarter 2000 estimate by three cents, and our outlook for the second half of 2000's growth in revenue per available room and profit margin are more optimistic. However, we are maintaining our 2000 EPS estimate of C$2.95 (plus-17%) as we estimate the one-time July 2000 employee strike at the Four Seasons Vancouver will offset the company exceeding our second-quarter estimate and our more optimistic outlook for the company's fundamentals.
by Merrill Lynch (38 1/4, Aug. 3)
In view of the disppointing EPS pre-announcement last night, we are lowering our intermediate-term investment opinion from Accumulate to Neutral .
by Needham (24, Aug. 3)
We are maintaining our 2000 EPS estimate of 63 cents, compared with a loss of eight cents a year earlier. We continue to look for a 49% increase in EPS in 2001 to 94 cents. We continue to rate the shares a Strong Buy rating, with a $36 12-month price target.
by Credit Suisse First Boston (10 7/16, Aug. 2)
We are initiating coverage with a Buy rating. The world's largest manufacturer of leather upholstery. Our positive view is based on the company's impressive margins (22% operating margins), industry-leading return on invested capital (23.4%), debt-free balance sheet and strong cash flow. Very attractively valued, trading at only 6.3 times our 2001 earnings estimate and 3.1 times projected fiscal 2001 earnings before interest, taxes, depreciation and amortization. We base our target price of $15 (44% upside potential) on a conservative multiple of nine (versus the company's five-year average multiple of 14) times our 2001 EPS estimate of $1.65.
Upgrades & Downgrades
by UBS Warburg (43 7/16, Aug. 2)
Second-quarter results were in line with estimates, but the market appeared disappointed by this performance. Although we have trimmed our second-half 2000 estimates, we believe the company's risk/reward profile looks favorable, and we reiterate our Buy rating. In addition, management's suggestion that third-quarter earnings could fall sequentially because of timing issues surrounding the launch of new products has caused concern. We believe the debate will now focus on whether this is just a temporary issue (and if margins will recover sharply in the fourth quarter, as suggested by the company), or whether these problems could continue to affect the company longer term.
by W.R. Hambrecht (1 1/2, Aug. 1)
We believe that the Salon brand is still strong, through monetization of the brand and compelling, original content has been problematic. As such, our rating is a purely speculative Buy rating, based on the assumption that the brand, currently trading at an enterprise value of $6.8 million, $2.72 per unique user, may be valuable to a media acquirer.
by Gruntal (9 15/16, Aug. 2)
We have initiated coverage on the common stock of the health-care Internet business-to-business company, with intermediate-and long-term investment ratings of Market Performer . The company's competitive advantages include a narrow industry focus, exclusive supplier agreements and a management team with health-care and supply-chain experience. Although it is a leader within its industry niche, we believe that the stock is fairly valued. Our intermediate-and-long-term target prices for the common stock are $10 and $12, respectively.
by Credit Suisse First Boston (17, Aug. 4)
We initiated coverage with a Hold . SCS is the largest manufacturer of office furniture in the world and has a leading market share of 19% in the U.S. Our old rating is based primarily on our cautious industry outlook. We expect the industry to slow by the end of the year given decelerating white-collar job growth and corporate profits. Additionally, the stock is up 42% year-to-date and now trades in line with its historical valuation multiples (12.1 times earnings, 5.9 times fiscal-year EBITDA).
by SG Cowen (118, Aug. 1)
Strong Buy . We forecast top-line sustainable growth at 12% and EPS growth of 20% driven by operating margin expansion and debt reduction, with ample room for upside. Based on the company's excellent growth prospects and strong market position, we believe the stock should trade at a premium to the S&P and the comparable group. We are raising our target price on the stock to $45 from $135 per share. This target is based on a 2.1 times multiple to the S&P, or 53 times, applied to our 2001 EPS estimate of $2.71, a 23% upside to current levels.