MARKET TALK: Jump In For An Extended Stay
10 Jan 09:52
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
(Call Us: 201 938-5299; All Times Eastern)
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9:51 (Dow Jones) Lehman initiated coverage of Extended Stay America (ESA)
with a buy rating and a 12-month price target of $21. The firm says the hotel
company had less exposure to the current downturn in travel trends, an
impressive growth track record and well-defined development plans. The relative
underperformance of lodging stocks versus the broader market also makes
Extended Stay a good entry point for the sector, the firm says. Shares off 0.2%
at $17.53. (DDO)
9:40 (Dow Jones) Merrill's Steven Pfeifer has named Phillips Petroleum (P)
his focus stock of 2002. He said challenging macro trends will make the market
focus on "self help" earnings stories driven by merger synergies and
cost-cutting. Phillips' plan to link up with Conoco (COC) in deal that will
likely close in the second half of the year is the right merger and the right
asset mix for this climate. Pfeifer has set a 12-month price target of $90 for
the stock. Shares up 0.2% at $59.10. (CCC)
9:32 (Dow Jones) Interesting that Willamette (WLL) is indicated to open
nicely higher. Weyerhaeuser (WY) says it got about 64% of Willamette's shares
tendered. While the Willamette board may not want the deal to happen, this
appears to be a pretty strong vote from shareholders that they do. Weyerhaeuser
was nice enough to extend the offer until Feb. 27. (TG)
9:25 (Dow Jones) Merrill analyst Steven Fortuna says, based on his channel
checks, there's some risk to Apple Computer's (AAPL) revenue target for the
December quarter. Apple's newest iMac was introduced "at the worst possible
time for consumers," he says, adding that the hype ahead of Apple's new product
launch this week caused many customers to defer their purchases until after the
new year, thus hurting December sales. The analyst, who had expected Apple to
report revenue of $1.4 billion, in-line with the company's target, now doesn't
expect that to happen. Fortuna is calling for Apple to post EPS of 10 cents a
share, a penny lower than the consensus. Apple reports Jan. 16. (DLF)
9:16 (Dow Jones) Lehman downgrades 13 REITs, keeping Vornado Realty (VNO) as
its lone strong buy. "Two years of relative outperformance combined with
slowing earnings momentum (4% growth in 2002) caused by weak fundamentals,
hardly cheap valuations (trading around NAV) and a flood of equity issuance in
Q4 are hardly the stuff of a strong stock market year. In bond market terms,
2002 will likely be the year of the coupon with 2004 being the next strong year
for real estate fundamentals." (GS)
9:05 (Dow Jones) It's not clear just when the foreign exchange market will
get a crack at the devalued Argentine peso but the euro could suffer if the
peso falls too fast and too far, traders say. EUR/USD is $0.8902, USD/JPY is
Y132.41, EUR/JPY is Y117.96. (JRH)
9:00 (Dow Jones) Here's how UBS sees Ford's (F) future over the next few
years: A company constantly readjusting its cost structure to a declining
market position, with further erosion to share still ahead. Not unlike GM of
past decades, the firm says. Right-sizing is going to be tough, given
restrictive union contracts, resulting in poor earnings power over the next 3-4
years, and UBS says Ford will struggle to return to $2 of EPS in that
timeframe. What's more, Ford "seems resolved" to spend up to $8B a year on
capex, a number well beyond its means, UBS says, and a further dividend cut,
equity offering, or both appears inevitable and reasonable before year-end.
Shares, cut to reduce from hold, could fall below $14 this year, having closed
Wednesday at $16.31. (TG)
8:49 (Dow Jones) A.G. Edwards late Wednesday downgraded Oracle (ORCL) and
NetIQ (NTIQ) to hold from buy on valuation. Oracle shares "do command a premium
to our estimated growth rate and this isalready built into our price objective
of $17." ORCL shares closed Wednesday at $16.73. As for NetIQ, the company's
shares are trading at almost 37x calendar 2002 estimates of 96c/share, and A.G.
Edwards projects NetIQ's longer-term growth rate of 40%. NTIQ closed at $37.23.
(GS)
8:43 (Dow Jones) It doesn't look like the better-than-expected read on the
jobs market has had much of an impact on stock futures. Neither has news out of
GM that it will top 4Q views, and will cut a lot of costs. Word from Kmart (KM)
that it will miss full-year views and is talking with lenders and reviewing its
liquidity position also hasn't stirred futures. (TG)
8:37 (Dow Jones) Import prices fell by 0.9% in December, dragged down by a
6.3% decline in oil prices. Non-oil import prices were down 0.3%, while export
prices were down 0.2%. Bottom line: foreign trade is having a deflationary
impact on U.S. prices. (JM)
8:34 (Dow Jones) Jobless claims fell by 56,000 to 396,000 in the week ended
Jan. 5. Claims may be understated due to an increase in California benefits
that takes place for claimants filing after Jan. 6. This may have caused
claimants to postpone filing to take advantage of the higher benefits. The
four-week average only slipped to 410,500 from 410,750. (JM)
8:30 (Dow Jones) Following Wednesday's discouraging late-day selloff - the
rumor mongers were out in full force - Wall Street looks prepared to deal with
the facts as we know them. Not that everything is glorious, but the 200-point
top-to-bottom reversal yesterday seemed a bit out of whack. Wal-Mart (WMT)
again delivered a pretty big monthly sales number, easily topping views, while
weekly jobless claims and inventories will keep the watchers of the economy
busy. Treasurys are soft in front of the data, and stock futures are pointing
to an open that looks unremarkable. (TG)
(END) DOW JONES NEWS 01-10-02
09:52 AM |
