<<MF May 1st 2001.pdf>>
			Good Tuesday Morning - Comments From The Local Guys!

The National Association of Purchasing Managers report for April this
morning was essentially unchanged versus March. The actual number was 43.2.
Any number below 50 indicates that the manufacturing sector is still
contracting. So, while this contraction is still in effect, it does seem as
if the inventory drawdown is continuing apace, which is a positive.

The 30-year US T-Bond yield is 5.72%.
The 10-year yield is 5.28%.
The 5-year is trading at 4.83%.
Spot crude oil is trading at $28.85 p/b.
Natural Gas - Henry Hub -  is trading at $4.70 p/mcf.

			AD Time:

New Federal Insider-Trading Rule (Rule 10b5-1) have been adopted by the SEC
under the Securities Exchange Act of 1934. This rule greatly enhances an
insider's/employee's ability to trade his/her corporate shares during
blackout periods.
Previously, without the protection of this new SEC rule, employees and
insiders could safely trade only outside of designated blackout windows.
Under this new rule, insiders/employees may have the ability to purchase and
sell their corporate shares even during blackout periods if a written plan
was established and in force when the insider/employee was not in possession
of material, non-public information.
The new rule contains other restrictions and should be reviewed carefully.

Lehman Brothers has established a turn-key plan that take into account the
regulatory procedures for establishing such a plan.    Please email us or
call us for more information.

				Lehman Brothers' Research.


IMPACT CALLS

UtiliCorp United(UCU) 2 - Buy D. Ford, .212.526.0836
Raising Rating on UtiliCorp to Buy from Market Perform
OLD NEW STREET P/E
Price: $35.30 EPS 2000 N/A $1.90 N/A N/A
52 Wk Ra: $36 - 19 EPS 2001 $2.15E $2.24E $2.32E 15.8
Mkt Cap: $3.9B EPS 2002 $2.35E $2.55E $2.66E 13.8
FY: 12/31 Price Target $31 $41
Rank 3 2
*We believe UtiliCorps ownership of Aquila is not fully reflected in UCUs
stock price and is, therefore, undervalued. As a result, we
are raising our rating to Buy from Market Perform with a $41 price target.
*Based on a sum of the parts valuation we believe UtiliCorp is worth $41 per
share, suggesting a potential total return of 19%. As
such, we are raising our rating to Buy from Market Perform.
*Approximately $17 of this value is derived from the value of the companys
North American networks business, interests in United
Energy Limited and UnitedNetworks Limited and an investment in Quanta
Services, Inc. The remaining value reflects the 80%
ownership of Aquila, Inc.
*We are also using this opportunity to raise our 2001 and 2002 earnings
estimates to $2.24 from $2.15 and $2.55 from $2.35,
respectively. Our new estimates reflect the beneficial effects of a
favorable commodity environment on the wholesale energy
business.

Forest Labs(FRX) 1 - Strong Buy R. Silver, .212.526.5387
Preview of Important Escitalopram Data Next Week
OLD NEW STREET P/E
Price: $61.15 EPS 2001 N/A $1.18 N/A N/A
52 Wk Ra: $72 - 40 EPS 2002 $1.53E $1.53E $1.55E 40.0
Mkt Cap: $11.3B EPS 2003 N/A N/A $1.86E N/A
FY: 3/31 Price Target $75 $75
Rank 1 1
*Forest remains one of our best investment ideas. Forest's robust earnings
outlook coupled with short-term, medium-term, and long-term
stock catalysts provide the required ingredients for investing with
confidence in the current market environment. Expected
newsflow on escitalopram next week represents the next key stock catalyst.
*On May 9 at the American Psychiatric Association meeting, new Phase 3
clinical trial data will be presented on escitalopram, Forest's
follow-on compound to blockbuster antidepressant Celexa.
*Escitalopram represents an important franchise lifecycle management tool
for Forest. Therefore, degree of differentiation for
escitalopram (vs. Celexa) remains an important swing factor in the product's
ultimate commercial success.
*Onset of action, raw efficacy, and side effect profile are the metrics that
allow for improvement with a new antidepressant. We
believe that escitalopram's faster onset of action (1 week vs. 2+ weeks)
will be a key competitive advantage.

FOCUS STOCKS

Cendant Corp(CD) 1 - Strong Buy J. Kessler, .212.526.5162
Financing Spotlights Cendant's Strategy Going Forward (A)
OLD NEW STREET P/E
Price: $17.70 EPS 2000 N/A $0.91 N/A N/A
52 Wk Ra: $18 - 8 EPS 2001 $1.00E $1.00E $1.01E 17.7
Mkt Cap: $13.4B EPS 2002 $1.12E $1.12E $1.08E 15.8
FY: 12/31 Price Target $30 $30
Rank 1 1
*Yesterday's announcement of a $750 million zero-coupon convertible
financing (see our note on the issuance), will shine a spotlight
on CD's acquisition/growth strategy. We believe Cendant is actively looking
at both auto rental, as well as lodging franchises. Both
are quickly accretive.
*Cendant could opt to pay down some debt as well with its zero coupon
financing. However, the most bang for the buck will come
with buying good franchises and operations at low EBITDA multiples. While
rumors in surrounding Budget have covered the
media, we think integrating a pure play - and at a lower multiple - like
ANC's Alamo or Dollar Thriftys Dollar, might be easier and
cheaper. We also expect the company to buy another lodging name that pushes
the "upper limit" of its mid-range brands (like
Amerihost), as well as continuing to buy and consolidate the cottage rental
business in Europe, to feed into its timeshare exchange
system.
*Real estate franchise, flat in Q1 may be helped by better than est. results
at a comp. March existing home sales were also better than
forecast.

Banks H. Dickson, .212.526.5659
1Q01 DCF Analysis: Median Undervaluation 18% (CD)
*According to our DCF analysis, the median stock in the Lehman Brothers Bank
Universe is undervalued by 17.9%. Based on April
26, 2001 closing prices, the stocks in our universe range from being 61.4%
undervalued to 8.7% overvalued.
*We continue to expect companies in our universe to sustain very modest
perpetuity growth. Our forecast implies median after-tax
dividendable income growth of 1.6% to perpetuity, versus 2.6% last quarter.
*This forecast means revenue growth should increasingly be a differentiating
factor in bank stock valuations.

Lucent Technologies(LU) 3 - Market Perform S. Levy, .212.526.2499
Upon Further Reflection....
OLD NEW STREET P/E
Price: $10.01 EPS 2000 N/A $0.68 N/A N/A
52 Wk Ra: $67 - 6 EPS 2001 -$0.79E -$1.04E -$1.01E N/A
Mkt Cap: $34.0B EPS 2002 -$0.02E $0.05E $0.26E 200.2
FY: 9/30 Price Target N/A N/A
Rank 3 3
*We see a fundamental bottom beginning to form at Lucent. The worst of y-o-y
rev declines are behind us even if the lack of growth
in front of us is still uncertain. As the largest supplier to the comm
service providers, it is going to be difficult to execute any sort of
a turnaround in a declining market.
*We have raised our CY01 and CY02 sales est and now expect $25.7 bil and
$29.1 bil, 13% growth, vs. to our previous est for $21.4
bil and $24.8 bil. We are lowering our expectations for gross margins and
now expect norm EPS of ($0.68) and $0.20 in CY01 and
CY02, compared to our prior estimates of ($0.54) and $0.11, respectively.
*We believe a bottom is more clearly forming in Lucents performance, but the
overall weakness of the telecom industry, and the
relative fragility of the company itself, make it difficult for us to change
our stance on LU shares. We continue to look for signs of
sustainability of revenues, increasing gross profitability, and further
improvements on the balance sheet before upgrading our rating.
The risk of a liquidity crisis has essentially diminished.

Williams Cos.(WMB) 1 - Strong Buy R. Gross, .212.526.3143
Raising Estimates and Target Price (A)
OLD NEW STREET P/E
Price: $42.17 EPS 2000 N/A $2.10 N/A N/A
52 Wk Ra: $48 - 30 EPS 2001 $2.00E $2.30E $2.10E 18.3
Mkt Cap: $20.4B EPS 2002 $2.30E $2.70E $2.04E 15.6
FY: 12/31 Price Target $46 $54
Rank 1 1
*We are raising our 01/02 estimates to $2.30 and $2.70 respectively, our
12-month target price to $54 from $46. Q1 results were
powered by Marketing and Trading operations. Backlog of projects will help
maintain 15-20% earnings growth target. Continue to
rate shares 1-Strong Buy.
*Q1 results of $0.78 were 150% ahead of 2000 as Marketing and Trading
operations registered a 522% increase in earnings
contribution.
*Management raised 2001 high-end earnings expectations to $2.10 from $1.95.
We think this is conservative and expect upwards
guidance as 2001 plays out.
*We are raising our 01/02 estimates to $2.30 and $2.70. Target price $54.
Given the persistence of volatility, high gas and power
prices, these numbers could likely prove too low.
*Management feels that the current operating platform, additional projects
should generate earnings growth of 15-20% for foreseeable
future.

COMPANY/INDUSTRY UPDATES

Department Stores/Broadlines J. Feiner, .212.526.2322
Weekly Retail Stock Barometer
*Retail stocks increased 4.0% for the week ended April 30, 2001,
outperforming the S&P 500, which posted an increase of 2.1%
versus the prior week.
*The best performing stock this week was Charming Shoppes, which posted a
21.5% increase versus the prior week. ShopKo was the
worst performing stock, registering a 11.2% decrease for the week.

David C. Morris
Sr. VP Lehman Brothers
713-652-7112/800-227-4537
dcmorris@lehman.com

Disclosure Legend: A-Lehman Brothers Inc. managed or co-managed within the
past three years a public offering of securities for this company. B-An
employee of Lehman Brothers Inc. is a director of this company. C-Lehman
Brothers Inc. makes a market in the securities of this company. G-The
Lehman Brothers analyst who covers this company also has position in its
securities.
Key to Investment Rankings: This is a guide to expected total return (price
performance plus dividend) relative to the total return of the stock's local
market over the next 12 months. 1 = Strong Buy (expected to outperform the
market by 15 or more percentage points); 2=Buy (expected to outperform
the market by 5-15 percentage points); 3=Market Perform (expected to perform
in line with the market, plus or minus 5 percentage points); 4=Market
Underperform (expected to underperform the market by 5-15 percentage
points); 5=Sell (expected to underperform the market by 15 or more
percentage
points).
This document is for information purposes only. We do not represent that
this information is complete or accurate. All opinions are subject to
change.
The securities mentioned may not be eligible for sale in some states or
countries. This document has been prepared by Lehman Brothers Inc., Member
SIPC, on behalf of Lehman Brothers International (Europe), which is
regulated by the SFA. ?Lehman Brothers, Inc.


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 - MF May 1st 2001.pdf