Services index rose to 599 in january up from 560 in

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services index rose to 59.9 in January, up from 56.0 in December and above the Bloomberg consensus forecast of 56.7. The Dow fell 0.6%, the S&P 0.5%, and the Nasdaq 0.3%. Crude oil fell to about $65 per barrel, while gold traded near $1337 per ounce. KINDER MORGAN INC. (NYSE: KMI) ............................ BUY We recently upgraded Kinder Morgan to BUY from HOLD. Our upgrade reflects Kinder Morgan’s strong recent operational performance and attractive valuation, both on a historical basis and relative to peers. We also like management’s plans for substantial dividend hikes (to $0.80 in 2018 and to 1.00 in 2019), which we view as a sign of confidence in the company’s strategy. Our target price of $23, combined with the dividend, implies a potential total return of 48% from current levels. DAILY INSIGHT 2017 - DJIA: 24,719.22 1934 - DJIA: 104.04 Independent Equity Research Since 1934 ARGUS A R G U S R E S E A R C H C O M P A N Y 6 1 B R O A D W A Y N E W Y O R K , N. Y. 1 0 0 0 6 ( 2 1 2 ) 4 2 5 - 7 5 0 0 LONDON SALES & MARKETING OFFICE TEL 011-44-207-256-8383 / FAX 011-44-207-256-8363 ®
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M ARKET U PDATE - 2 - ESTEE LAUDER COMPANIES INC. (NYSE: EL, $136.44) ...................................................... BUY EL: Raising target by $16 to $158 * Estee Lauder has invested heavily in its businesses in recent years and continues to benefit from strong demand for high-end beauty products. We also like the company’s mix of retail stores, e-commerce and “travel retail” sales at major airports. * We believe that Estee Lauder can reach its revised targets of 8%-9% local-currency revenue growth and double- digit earnings growth over the next three years. * Reflecting management’s guidance and the company’s history of positive earnings surprises, we are raising our FY18 EPS estimate from $4.20 to $4.42. For FY19, we are increasing our estimate from $4.65 to $4.95. * Our $158 target implies a multiple of 35.7-times our revised FY18 earnings estimate, and a potential total return of 18% including the dividend. ANALYSIS INVESTMENT THESIS We are maintaining our BUY-rating on Estee Lauder Companies Inc. (NYSE: EL) and raising our target price from $142 to $158. The company continues to benefit from strong demand for high-end beauty products, and about one-third of its brands are posting double-digit revenue growth. We also like its mix of retail stores, e-commerce and “travel retail” sales at major airports, and its efforts to invest in developing the business. We believe that Estee Lauder can reach its targets of 8%-9% local-currency revenue growth and double-digit earnings growth over the next three years. The company has also steadily raised its dividend, which currently yields about 1.1%. We are keeping our long-term rating at BUY. RECENT DEVELOPMENTS On February 2, Estee Lauder reported fiscal 2Q18 earnings of $1.52 per share, up nearly 25% from $1.22 in the prior- year period and above the consensus estimate of $1.44. Management’s guidance had called for earnings of $1.38-$1.41. EPS benefited from higher-than-expected revenue and the acquisitions of Too Faced and Becca, which outweighed a disappointing gross margin.
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