From Briefing.com: The Semiconductor Industry Association reported worldwide sales of semiconductors increased 26.6% Y/Y to $15.5B in January, powered by a 34% Y/Y rise in the Asia-Pacific market and 32% growth in Japan. Europe increased 19.5% Y/Y and the Americas rose 14.8%. The industry trade group is maintaining its full year forecast of 19.4% Y/Y growth for the sector, driven by communications, computers and consumer electronics.
Large cap semiconductor shares got off to a weak start despite the SIA data but managed to overtake the major indices by mid-morning and finish the day near session highs. The Philadelphia Semiconductor Index (SOXX 513.11 +10.85) rose 2.16%. Advancers led decliners 17 :1. The Briefing.com Tech Index (BTI) rose 1.49%. Advancers outnumbered decliners 2.4:1, with advancers gaining 3.3% and decliners losing 2.5%.
The Nasdaq Composite (IXIC 2057.80 +27.98), boosted by the strong tech sector, climbed 1.38%. The S&P (SPX 1155.97 +11.03) increased 0.96% and the Dow (DJI 10678.14 +94.22) gained a more modest 0.89%, buoyed by favorable January Personal Income and Spending, and ISM data (please see Economic Briefing or the Economic Calendar for details).
Among today's movers, BTU International (BTUI 6.46 +1.41) jumped 28.0%, NetScout Systems (NTCT 8.53 +1.63) jumped 23.6%, Niku (NIKU 15.40 +2.23) rose another 16.9% after jumping 15.0% on Friday following the company's Q4 results.
After the close, Computer Network Technology (CMNT 10.54 +0.38) posted results in-line with Reuters Research consensus and guided below consensus but in-line with management expectations, and MacroVision (MVSN 20.45 +0.93) posted results ahead of consensus but guided below expectations.
Looking ahead to Tuesday, Finisar (FNSR 2.86 -0.01) and SeaChange (SEAC 18.64 +1.40) report after the close.
The table below shows companies with improving operating performance that are attractively priced vs. industry comparables on a price multiples-to-growth ratio basis.
7:31PM Tech Relative Value Ideas--New Focus List (SOXX) The table below shows companies with improving operating performance that are attractively priced vs. industry comparables on a price multiples-to-growth ratio basis.Company Ticker Sector *P/SG Ratio Ind Avg P/SG Ratio **P/OIG Ratio Ind Avg P/OIG Ratio
Affiliated Computer Services ACS Computer Services 0.8 1.2 5.5 19.6
Anteon International ANT Computer Services 0.7 1.2 9.0 19.6
Comtech Telecom Corp CMTL Communications Equipment 0.9 2.0 11.6 43.0
Harris Corp HRS Communications Equipment 0.9 2.0 18.9 43.0
Komag KOMG Computer Sys & Peripherals 0.6 1.0 6.6 19.7
Lexmark International LXK Computer Sys & Peripherals 1.5 1.0 14.5 19.7
Raven Industries RAVN Electronic Instruments & Controls 1.5 0.8 10.6 (84.3)
SI International SINT Software & Programming 0.7 1.2 13.4 19.6
*TTM P/SG Ratio: (Price / Sales) / Sales Growth as of February 27, 2004.
**TTM P/OIG Ratio: (Price / Operating Income) / Growth as of February 27, 2004.
Affiliated Computer Services (ACS 49.39 +1.13): Trading at 1.5x F04 revenue of $4.228B (+11.6% Y/Y) and 1.3x F05 of $4.804B (+13.6% Y/Y); 18.8x F04 EPS of $2.63 and 16.2x F05 $3.04.
Anteon International (ANT 30.05 +0.80): Trading at 0.86x C04 revenue of $1.236B (+18.6% Y/Y) and 0.75x C05 of $1.410B (+14.1% Y/Y); 19.9x C04 EPS of $1.51 and 17.1x C05 $1.76.
Comtech Telecom Corp (00C0 29.15 +0.83): Trading at 1.9x F04 revenue of $219.07MM (+25.9% Y/Y) and 1.7x F05 of $236.90 (+8.1% Y/Y); 24.7x F04 EPS of $1.18 and 22.4x F05 $1.30.
Harris Corp (HRS 47.87 +0.62): Trading at 1.3x F04 revenue of $2.424 (+15.8% Y/Y) and 1.2x F05 of $2.633B (+8.6% Y/Y); 24.9x F04 EPS of $1.92 and 21.8x F05 $2.20.
Komag (KOMG 23.07 +0.23): Trading at 1.1x C04 revenue of $481.14MM (+9.8% Y/Y) and 1.1x C05 of $508.57MM (+5.7% Y/Y); 13.3x C04 EPS of $1.74 and 12.0x C05 $1.93.
Lexmark International (LXK 82.82 +0.53): Trading at 2.0x C04 revenue of $5.194B (+19.2% Y/Y) and 1.9x C05 of $5.549B (+6.8% Y/Y); 22.3x C04 EPS of $3.72 and 19.9x C05 $4.17.
Raven Industries (RAVN 31.75 +0.11): No ests available.
SI International (SINT 22.43 -0.11): Trading at 0.76x C04 revenue of $249.19MM (+48.1% Y/Y) and 0.65x C05 of $290.56MM (+16.6% Y/Y); 19.0x C04 EPS of $1.18 and 15.9x C05 $1.41.
We'll track returns for this group over the next 12 months and post the performance at the end each month on both the Story Stocks and the Tech Stocks pages.
Look for an updated list of names that we think are attractively priced on a relative value basis at the beginning of each month. We will also continue to highlight relative value ideas on the Tech Stocks page on a regular basis.
E-mail if you wish to receive notification when we post an updated list.--Ping Yu, Briefing.com
11:59AM Tech Relative Value Ideas Performance Update (SOXX) The table below shows the updated performance, as of February 27, 2004, for each company highlighted on the Tech Stocks page as being attractively priced on a relative value basis. We would continue to focus on these names. as of 02/27/04
Company Ticker Date Price Price % Change
ASM International ASMI 10/14/03 17.13 23.64 38.0
ATI Technologies ATYT 10/01/03 15.82 15.60 (1.4)
CIBER CBR 10/08/03 8.08 9.50 17.6
City Telecom CTEL 10/02/03 6.65 6.97 4.8
Comtech Telecom CMTL 10/16/03 28.75 28.32 (1.5)
Corrillian Corp CORI 10/03/03 3.43 5.26 53.6
Open Text OTEX 10/03/03 18.93 29.73 57.1
Electronic Arts ERTS 10/01/03 47.44 47.16 (0.6)
Fiserve FISV 10/01/03 37.66 38.56 2.4
Overland Storage OVRL 10/02/03 15.30 18.01 (1.3)
Trader Classified Media TRDFF 10/09/03 9.25 13.50 45.9
United Online UNTD 10/02/03 22.27 17.22 (22.7)
UTStarcom UTSI 10/01/03 31.91 33.13 3.8
Vishay VSH 10/07/03 19.48 22.51 15.6
Average 16.4%
Nasdaq Composite IXIC 2,029.82 8.5%
Philadelphia Semiconductor Index SOXX 502.26 13.1%
Dow Jones Industrial Average DJI 10,583.92 10.5%
S&P 500 SOXX 1,144.94 11.3%
The group on average returned 16.4% as of February 27, 2004, up 2.4 pts from 14.0% as of January 30, 2004. This compares against the Nasdaq which dropped 1.9 pts M/M, the SOXX which dropped 2.7 pts, the Dow which rose 1 pt, and the S&P which rose 1.4 pts over the same holding periods.
We'll post an updated list of names that are attractively priced on a relative value basis on the Story Stocks and Tech Stocks pages today and at the beginning of each month, as well as continue to highlight relative value ideas on the Tech Stocks on a regular basis. E-mail if you wish to receive notification when we post the list.--Ping Yu, Briefing.com
9:10AM Ratings Briefing - INTC : JP Morgan downgrades Intel (INTC 29.20) to Neutral from Overweight, saying it has yet to see any meaningful improvement in the notebook segment, and as a result, firm believes the company will not raise guidance during its mid-qtr update for the first time in almost a year. In addition, checks indicate Q2 bookings at Intel have been soft, which could be a second negative catalyst for the stock as consensus estimates could be lowered following Q1 results. Intel's delay in launching Prescott and Dothan could hurt overall ASPs in the near-term, and J.P. Morgan expects that there could be a small negative impact from AMD gaining share in low-end servers with Opteron products.
What It Means:
At J.P. Morgan a Neutral rating means that firm expects the stock, over the next 6-12 months, will perform in line with the average total return of the stocks in the analyst's (or the analyst's team's) coverage universe
While Nasdaq futures are pointing to a higher open, don't look for Intel to lead the uptick as the J.P. Morgan downgrade should ensure continued underperformance for the stock, which is down 8.9% for the year versus a 1.15% decline for the SOX, a 1.3% gain for the Nasdaq, and a 3.0% gain for the S&P 500
Intel's mid-quarter update to occur after Thursday's close.... absent any other influential firms coming to Intel's defense, the timing of J.P. Morgan's downgrade should keep stock under wraps going into update
Rationale for J.P. Morgan's downgrade plays into concerns that semi stocks have gotten ahead of fundamentals as J.P. Morgan is pointing to lower than expected demand in notebook segment as reason for why Intel will not raise guidance during its update for first time in almost a year; moreover, J.P. Morgan also calling into question the validity of current consensus estimates for Intel for Q2
J.P. Morgan said it is forecasting the rate of revenue growth for Intel to decline throughout 2004 and 2005... acknowledgment apt to invite added concern about stock's prospects as J.P. Morgan notes that changes in Intel's stock price have traditionally closely correlated with actual yr/yr growth rates in revenues
Prevailing view on Intel in the analyst community is skewed to the bullish side, so if Intel disappoints with mid-quarter update, look for a slew of downgrades to follow.. current distribution: 15 Buy; 16 Outperform; and 7 Hold [source: Reuters Research]
Sidenote: J.P. Morgan also downgraded its semiconductor sector rating to Neutral from Positive and cut its rating on Advanced Micro Devices (AMD) to Underweight from Neutral... on Feb. 13, Banc of America trimmed its Q1 revenue estimate for Intel, citing weaker than expected notebook PC demand... Intel is a component in Briefing.com's portfolio for active investors-- Patrick J. O'Hare, Briefing.com
2:12PM AMAT: Hearing co's comments at Morgan Stanley conference being viewed favorably by market 21.63 +0.38: Hearing that comments by company at Morgan Stanley conference, suggesting that it is very early in the cycle, contributing to strength in the stock in late action.
1:52PM XLNX: Pacific Growth previews Mid-Qtr update 41.96 -0.02: Pacific Growth comments that Xillinx will provide mid-quarter update after market close tomorrow. Given firm's positive channel check results, firm expects XLNX to raise its MarQ growth guidance to 10% from original guidance of 7-10%.
11:49AM FLSH started with a Buy at CE Unterberg; target $27 19.67 -0.30: CE Unterberg initiates coverage of M-Systems with Short-Term Buy/Long-Term Buy ratings and $27 target; firm believes that the co's Mobile DiskOnChip should be its major driver of growth in 2004, and that initiatives to enter removable flash memory mkt for multimedia handsets offers additional rev upside in 2005.
11:09AM January SIA off to tough start -- ThinkEquity : In a morning note, ThinkEquity comments that January was tough, even tougher than firm thought as the SIA data for January confirmed that 2004 got off to a rocky start. Firm still expects the industry to grow close to 20%, but tougher comps starting this Spring means Y/Y growth will slow during 2H04. Unit sales dropped 11% sequentially in January, larger than the normal -- due to much weaker microprocessor sales stemming from the much earlier Chinese New Year and constraints for laptops (including chips design delays). Pricing trends also continue to concern firm.
10:35AM Reversal Alert -- INTC shakes off downgrade-related weakness, notebook issues seen by some as old news 29.18 -0.02:
9:12AM Barron's article comments on SNDK growth prospects 25.42: Barron's article highlights comments made by Sandisk (SNDK) during its first ever analyst day. At last week's analyst gathering, SanDisk chief executive Eli Harari said that his company could have annual sales of $5 billion by 2009, if it maintains its one-third share of the flash market. The co's shares now trade for about 20 times the $1.25 per share earnings that's predicted for 2004. According to the article, if the company can leverage its operating profits on the torrid growth of flash sales, it might grow dollar profits fast enough to reclaim investors' ardor and a premium earnings multiple. What spooked investors down from November's heights has been SanDisk's prediction of continued flash price declines of 40% a year, and gross margin declines from about 34% to about 30% toward the end of 2004. However, if unit shipments continue growing at 200% per year, the company figures it can grow its gross margin dollars, even with declining prices and gross margins.
Advanced Micro (AMD) 14.69 -0.11 : JP Morgan downgraded Neutral to UNDERWEIGHT. Cited valuation, as stock is up 30% since Oct, and fact that Intel's flash price reductions could pressure AMD flash pricing.
Bell Micro (BELM) 8.27 -0.96 : Plans $75 mln Convertible Subordinated Notes offering.
Conexant (CNXT) 7.77 +0.42 : Conexant and GlobespanVirata complete merger.
Marvell (MRVL) 45.72 -0.03 : Co announced that Agilent Technologies' HBCU-5710R Small-Form Factor Pluggable module is powered by Marvell's industry-leading Alaska Gigabit Ethernet Physical Layer technology.
Intel (INTC) 29.69 +0.49 : Intel (INTC 29.69 +0.49): JP Morgan downgraded Intel to Neutral from Overweight, saying they have yet to see any meaningful improvement in the notebook segment, and as a result, firm believes the co will not raise guidance during its mid-qtr update for the first time in almost a year; in addition, checks indicate Q2 bookings at Intel have been soft, which could be a second negative catalyst for the stock as consensus ests could be lowered following Q1 results; and the co's delay in launching Prescott and Dothan could hurt overall ASPs in the near-term, and they expect that there could be a small negative impact from AMD gaining share in low-end servers with Opteron products.
Xilinx (XLNX 42.65 +0.66): Pacific Growth commented that Xillinx will provide mid-quarter update after market close tomorrow. Given firm's positive channel check results, firm expects XLNX to raise its MarQ growth guidance to 10% from original guidance of 7-10%.
BTU International (BTUI) 6.46 +1.41 : Needham raised its tgt on BTU International to $14 from $7 following co's announcement of 4QEPS. Firm also raised 2004 EPS estimate to a loss of $0.25 from a loss of $0.34 and introducing a fully taxed EPS estimate of $0.70 for 2005.
finance.yahoo.com
Sounds good to me Don. Don't let my reservations hold back the upturn in our stocks! ;-)
RtS |
