From Standard & Poor’s Equity Research

Watch original video:

SANDLER O’NEILL UPGRADES CITIGROUP TO BUY FROM HOLD

Sandler O’Neill analyst Jeff Harte says yesterday’s news of a joint venture betwixt the U.S. government and Citigroup (C) reinforces his belief that the powers that be has drawn a proverbial line in the sand around Citi’s survival.

Harte views the actions as positive for common shareholders. He notes that Citi’s weighing sheet a little while ago has an unprecedented backstop provided by the government.

He cuts $0.06 fourth quarter 2008 EPS look on to $0.62 failure to win on increased good repute shyness builds and asset mark-to-market losses. He lowers $1.70 2009 EPS estimate to $1.00 EPS.

MORGAN KEEGAN DOWNGRADES KINDER MORGAN ENERGY PARTNERS

Morgan Keegan algebraist John Edwards says he’s downgrading Kinder Morgan Energy Partners (KMP) to market perform from outperform on the company’s apportionment government.

Edwards notes that KMP is still basing its 2008 distribution batch of $4.20/unit on $68/barrel, which he believes is optimistic in light of a $60 strip for 2009 and negative economic headwinds that are likely to pressure the outlook for commodity price recovery.

He assumes $50-$60/barrel for West Texas Intermediate crude oil for 2009, and cuts his distribution produce view for KMP to -1.5% for 2009 from his author view of 7.6%.

BAIRD DOWNGRADES ULTA SALON TO NEUTRAL FROM OUTPERFORM

Baird Analyst J. David Cumberland says the downgrade of Ulta Salon, Cosmetics & Fragrance (ULTA) is appropriate to the potential instead of reduced estimates, multiple contraction together weak consumer expenditure.

He expects the company’s third quarter near the low end of guidance (comps 3%-5%; EPS $0.08-$0.10; consensus $0.09). He notes that the fourth quarter accounts for over half of projected 2008 EPS (due to gift-related buying); he’sitting concerned over ULTA’s ability to reach implied guidance of 3%-5% comps, $0.29-$0.32 EPS.

Cumberland says estimate reductions could cause further multiple shrivelling from forward p-e of 13.1. He cuts $17 price target to $10.

Original text: {news-link}