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Wall Street's daily picks
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April 28, 1999: 2:31 p.m. ET
Diagnosis unfavorable for McKesson HBOC, while Interface gets a knock
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NEW YORK (CNNfn) - Wall Street analysts revised their ratings of the following companies, according to remarks issued Wednesday by estimate-tracker First Call Corp.
McKesson HBOC (MCK) opened the floodgates for a rain of downgrades after the pharmaceutical supply firm warned that improperly recorded earnings for the 1999 fiscal year ended March 31 would force it not only to restate those figures but also to revise its forecasts for fiscal 2000.
As a result, McKesson said, full-year 2000 profits will come in at $2.50 per share, substantially under analysts' expectations of $2.94 per share.
Among the Wall Street firms cutting their formerly bullish recommendations in the announcement's wake, Merrill Lynch downgraded the stock to "long-term accumulate, near-term neutral" from "buy." Morgan Stanley chopped its rating to "neutral" from "outperform" and SG Cowen lowered its "strong buy" to a flat "buy." First Union Capital Markets downgraded the stock to "hold" from "buy," while BT Alex. Brown lowered its rating to "market perform" from "buy."
Amid this downpour of discouraging words, McKesson shares tumbled 32-1/8, nearly half their value, to 33-5/8.
Carpet manufacturer Interface (IFSIA) blamed sagging British sales for its gloomy forecast of weak 1999 earnings, warning shareholders late Tuesday that full-year profits will come in around 70 cents per share.
Wall Street had expected Interface to bring in a dollar per share in 1999, leading one of the analysts polled by First Call to cut his rating of the company to "buy" from "strong buy." Shares slid 3-3/8, or 33 percent, to 6-13/16.
Among other significant rating events, Merrill Lynch upgraded shares of natural gas firm Dynergy (DYN) to "accumulate" from "neutral" after the company's first-quarter earnings topped analysts' estimates. Schroder & Co. also upgraded the stock, to "outperform significantly" from a straight "outperform." Shares edged up 7/16 to 15-11/16.
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