S&P Picks and Pans: Hartford Financial, Goodyear, Ford, American Tower, Oshkosh, JPMorgan

S&P UPGRADES OPINION ON HARTFORD FINANCIAL TO HOLD FROM SELL, ON VALUATION (HIG 14.70):

With shares down about 83% year-to-date, we believe the issues weighing on HIG are reflected in current price levels. While we believe the company's balance sheet is more susceptible to further impairments than many peers, we find some comfort in HIG's projection of about $2 billion of excess capital at year-end. Until volatility in the capital markets subsides, we see upside in shares limited by lack of transparency regarding future deferred acquisition costs and investment losses. We are raising our 12-month target price by $2 to $16, roughly 0.6 times our 2008 book value estimate. -B. Howlett

S&P UPGRADES OPINION ON SHARES OF GOODYEAR TIRE & RUBBER TO BUY FROM HOLD (GT; 9.78):

Before special items, GT posts third quarterEPS from continuing operations $0.38, vs. $0.68, below our $0.44 estimate. Despite the approval of the transfer responsibility for union healthcare benefits to the union, which we expect will save GT $100 million in 2009, and other costs savings efforts, we are cutting our 2009 EPS estimate by $0.68 to $1.95, given weakening tire demand in the U.S. and abroad for new and replacement tires, with expected higher commodity costs into 2009. We are also lowering our 12-month target price by $5 to $14, 7.2 times our 2009 EPS estimate, based on p-e analysis. -E. Levy-CFA

S&P REITERATES HOLD OPINION ON SHARES OF FORD MOTOR (F; 2.18):

Ford's year-to-year October sales fell 30% from a year ago. With gas prices off their highs, and amid a push to get old models out the door, F-150 truck sales fell just 16%, compared to declines of 27% for cars, 39% for crossover UVs and 54% for SUVs. As a possible bright spot, Ford believes it gained retail marketshare. Even so, it has an unusually subdued near-term outlook as monthly industry auto sales likely fell below 900,000 units. Economic and market concerns have hurt the industry, along with harsher credit terms. We do not see near-term relief for Ford or its depressed shares. -E. Levy-CFA

S&P REITERATES STRONG BUY OPINION ON SHARES OF AMERICAN TOWER (AMT; 32.76):

AMT reports third quarter EPS, before one-time items, of $0.15 vs. $0.15, $0.02 ahead of our estimate. On the outperformance we are raising our 2008 EPS forecast by $0.02 to $0.52 and 2009's by $0.02 to $0.72. We believe that AMT continues to see strong demand in tower leasing and is starting to build new towers in India at a solid pace. Additionally, we believe the company is experiencing strong demand in Brazil and is benefiting from an increase in customer competition. We raise our 12-month target price by $3 to $51, based on 27 times our 2009 free cash flow estimate. -J. Moorman, CFA

S&P MAINTAINS HOLD RECOMMENDATION ON SHARES OF OSHKOSH CORP. (OSK; 8.29):

September-quarter EPS of $0.72, vs. $1.14, on revenue growth of 6%, exceeds our $0.65 estimate. Revenue rose on demand for defense, refuse collection and fire apparatus products, partly offset by weaker demand for access equipment. We are encouraged that OSK continues to focus on cost control and production efficiencies to meet demand in its current end-markets; however, we believe it remains vulnerable to U.S. Defense Dept. spending, its largest customer (21% of fiscal year 2007 revenue). We keep our fiscal year 2009 (September) EPS estimate of $2.75, but trim our target price by $2 to $11 on revised DCF valuation. -A. Compton

S&P MAINTAINS STRONG BUY OPINION ON SHARES OF JP MORGAN CHASE (JPM; 41.25):

JPM says it will modify terms for up to 400,000 homeowners, accounting for roughly $70 billion of its loans. We believe a large portion of the loans are connected to Washington Mutual, which JPM acquired in late September. The move, which comes on the heels of the FDIC modification of some IndyMac loans, and a similar loan modification by Bank of America (BAC; 24.00), should help to reduce foreclosures. The FDIC is also working on a new program for loan modification. All together, we believe that charge-offs will ease off of levels they would have reached without these programs. -S. Plesser

Source: businessweek.com