MARKET TALK: Pru Takes Up Stay In Hotel REITs
09 Jan 14:30
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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2:28 (Dow Jones) Prudential analyst Jim Sullivan upgraded the hotel REIT
sector based on improving industry fundamentals and an expected economic
recovery in the second half of 2002. As part of the upgrade, he raised his
rating on FelCor Lodging Trust (FCH) to buy from hold, and reiterated his
ratings on LaSalle Hotel Properties (LHO) and MeriStar Hospitality (MHX) at buy
and Host Marriott (HMT) at hold. In 2001, hotel REITs delivered the poorest
returns in the REIT universe at negative 8.6%. (Equity REITs on average posted
returns of about 14%). Sullivan is predicting a sharp recovery in lodging
demand and room rate and occupancy growth in 2003. (JKM)
2:19 (Dow Jones) Goldman Sachs says SAP's (SAP) strong 4Q bodes well for
other software vendors, many of whom lowered December expectations post 9/11.
"It seems there has been more seasonal spending on software than originally
anticipated and this has been exacerbated by any spillover effect from the
September quarter," Goldman says. Firm believes PeopleSoft (PSFT) and Siebel
(SEBL) also had strong December quarters. Software group among best sectors
Wednesday. (MLP)
2:11 (Dow Jones) By saying enrollment will rise in 2002, Oxford Health (OHP)
has alleviated one of the big concerns that led to Advest analyst Rob Mains
lowering his rating last year. So, Mains is upping the managed care company to
buy from neutral, saying "we feel there is good visibility" at the company
again. Shares up 13% at $33. (RJH)
1:57 (Dow Jones) Economic data are moving from bad to mixed and manufacturing
contraction appears near the end, says Dallas Fed's McTeer, as Treasurys
continue to trade moderately lower, with 10-year yielding 5.10%, up 3 BP on
session, with price down 7/32. (JNP)
1:53 (Dow Jones) Theauto-parts industry is facing a challenging short term
outlook and could see some high-yield bond defaults in the first half of the
year, according to analysts. For the 1Q especially, "expectations are extremely
low," says Brett Hoselton, McDonald Investments' senior auto analyst. Hoselton
says parts makers are being told by customers to keep production low, and
customers usually "err on the high end" when supplying production estimates. As
a result, parts companies have "cut back on inventories and are facing
uncertain sales going forward," according to Hoselton. Kevin Morley, managing
director at CSFB, says the first half of 2002 "is shot....It'll be another
tough year, although better than last year." (JM)
1:37 (Dow Jones) Network equipment vendor Nortel Networks (NT), followed by
Biovail (BVF), a biotech company, and then newsprint producer
Abitibi-Consolidated (ABY) were the top Canadian stock picks for 2002 based on
survey by consulting firm Towers Perrin of Canadian and International
investment managers. A majority of the 71 survey respondents also said they
expect lower returns from the bond market this year, and all of the respondents
indicated plans to increase their allocation to equities at the expense of
bonds in their portfolios by the middle of 2002. (BED)
1:28 (Dow Jones) Marking a dismal year for M&A, acquirers spent $39.7 billion
to buy 1,289 Internet companies in 2001, according to Webmergers.com.
Underscoring the drop in M&A activity and plunge in valuations, last year's
dot-com deal volume is only about 25% of what America Online (AOL) paid to
acquire Time Warner a year ago. Last year's Internet deal volume also is less
than the $40 billion to $60 billion accounting charge that AOL will write down
due to the valuation shortfall from that deal, notes Webmergers. (JAW)
1:17 (Dow Jones) As the Nasdaq Composite Index pushes toward 2100, implied
volatility in the tech sector fell as investor optimism grew. The Amex's Nasdaq
Volatility Index, or QQV, declined 1.07 to 39.03, and traders and investors are
keeping a close watch. Since late-August, this tech-sector fear gauge has
dipped intraday below 39 during just four sessions - each time, the Nasdaq
pulled back within one or two days (although not always by much). (KT)
1:07 (Dow Jones) The confirmed crash of a marine refueling plane in Pakistan
hasn't altered the direction of stocks much. The Pentagon is saying there's no
evidence the plane was fired upon. DJIA up 85 at 10235, Nasdaq Comp adds 37 to
2092, and S&P 500 adds 10 to 1170. (TG)
1:02 (Dow Jones) The National Association of Homebuilders has raised $6
million for providing financial housing assistance to families impacted by the
Sept. 11 disaster. The money will go to families who lost a family member or
lost a job in a business south of Canal Street in Manhattan. The trade group
has set up a hotline for interested applicants at 212-385-4949. (JKM)
12:53 (Dow Jones) Robertson Stephens says the assumptions supporting its 2003
adjusted EPS view of $1.43 a share for Cendant (CD) are conservative,
especially since they don't include any help from acquisitions. Valuation of
Cendant remains attractive, and firm reiterates strong buy rating, $31 target.
Shares up 2.6% at $19.16. (TG)
12:42 (Dow Jones) JP Morgan analyst Mike Weinstein upped his price target on
medical device giant Guidant (GDT) to $65 a share from $55 a share, predicting
the company's 4Q financial results will top his expectations of 46 cents a
share, aided by share gains in stents and re-acceleration in the market for
implantable electronic defibrillators. Guidant plans to post 4Q results on Jan.
29. (JJO)
12:32 (Dow Jones) Goldman Sachs' Pablo Morra, commenting on Argentina, said
in part: "We believe that, in the most likely scenario, confidence will suffer
further, activity will continue to shrink, and the government will continue to
run a sizable fiscal deficit. Without access to voluntary or official
financing, part of this deficit will likely be covered with Lecops (Treasury
bills that play the role of money) and the rest via outright money printing,
'feeding' inflation and currency depreciation." (JCC)
12:19 (Dow Jones) Initial headline that sent USD/JPY lower was Takenaka's
remark that it's not correct that Japan is targeting the Y135-Y140 range. But
later comments on pace and fundamentals "were certainly more bullish than not,"
BNP Paribas' Bob Lynch said. Pair now stabilizing at morning's Y132.50 level.
Meanwhile, EUR/USD bouncing to $0.8885 after quick drop through support to
$0.8866 with no follow-through. (JEN)
12:07 (Dow Jones) Despite Merrill Lynch (MER) announcing the elimination
9,000 positions, analysts say Wall Street likely won't cut jobs on a massive
scale in the coming months - barring another economic downturn. Securities
firms will likely reevaluate their staffing levels this spring and could make
some cuts if the pipeline looks less than rosy, said David Trone, a Prudential
Securities analyst. So far, investment banking pipelines appear to growing,
foreshadowing a possible mid-year recovery. (CUB)
(END) DOW JONES NEWS 01-09-02
02:30 PM |
