MARKET TALK: Cash Is Cash, And Tyco Is Up
08 Feb 11:43
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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11:42 (Dow Jones) Still doubt cash is king on Wall Street? Take a look at
what Tyco (TYC) shares are doing after SEC filing validated management's
guidance on cash flow. The filing "makes (cash flow guidance) more real," said
analyst Harriet Baldwin of Deutsche Banc. Tyco is up 6%. (CCW)
11:33 (Dow Jones) The odds of the pending merger between Echostar (DISH) and
Hughes Electronics (GMH) aren't looking so good, says Salomon Smith Barney
analyst Armand Musey. Based on a preliminary analysis of comments filed with
the FCC, Salomon gives it about a 20% chance of winning FCC approval, a
considerable drop from the 40% odds the firm estimated in a Jan. 17 report. "We
believe filings by Pegasus and the NRTC that analyze competition between DISH
and DirecTV demonstrate a strong potential for negative pricing impacts if the
two are allowed to merge, while weakening the arguments behind DISH's national
pricing 'solution' for high market concentration," says Musey. Accordingly,
Salomon lowered its 12-month price target on Echostar to $30 and on GMH to $18.
(JAW)
11:27 (Dow Jones) CBO, which published its first macroeconomic forecast in
1976, says it "has compiled a forecasting track record comparable in quality
with those of a sizable sample of private-sector forecasters as well as five
Administrations." (JCC)
11:24 (Dow Jones) While many traders are still cautious and skeptical, call
trading is finally picking up as stocks rally Friday morning from what many say
are oversold levels. At the CBOE, the ratio of equity puts traded to calls fell
to 0.61 - compared with readings of 0.91, 0.92, 0.88 and 0.78 the four prior
days this week. Index put/call ratio was at 1.38. (KT)
11:11 (Dow Jones) VeriSign (VRSN) shares have gotten cheaper, yet the
company's prospects for strong cash flow growth in 2002 are good, says Bear
Stearns analyst Chris Kwak. He raised his VeriSign rating to "attractive" from
"neutral" Friday. The stock has fallen sharply on concerns that VeriSign didn't
properly disclose investments it made in overseas companies that resell its
security software and other services. Kwak says don't worry. "We are satisfied
by these affiliate arrangements," he says.. He has a $37 price target. The
stock's up $1.84, or 8%, to $25.94 Friday. (PDL)
10:57 (Dow Jones) Limited (LTD) said 12 lawsuits have been filed against it
by shareholders of Intimate Brands (IBI) since Feb. 5. The lawsuits involve
Limited's $1.5 billion stock offer to buy back the 16% of Intimate Brands
shares it doesn't own. Limited is offering to exchange 1.046 of its shares for
each Class A share of Intimate Brands. The lawsuits contend that Limited's
exchange offer of shares to Intimate Brands' shareholders is "inadequate and
unfair" and that Limited and the individual defendants "breached their
fiduciary duties to Intimate Brands' shareholders in formulating and making the
exchange offer." (GL)
10:43 (Dow Jones) King Pharmaceuticals (KG) recalled drugs for ear and eye
infections on concerns that the products may no longer be sterile, according to
FDA documents that say the number is more than 2.5 million units. King
spokesman James Green confirmed the recall, but said the amount of products
actually being recalled is only a small percentage of that listed by the FDA,
because the products have been on shelves for some time and the majority have
been used already. The drugs are manufactured for King by DSM Catalytica
Pharmaceuticals. Green said the recall covered all products made for King by
DSM Catalytica dating back to 1997. KG up 1.1% at $32.11. (CS)
10:32 (Dow Jones) Whether shareholders approve or block the merger of
Hewlett-Packard (HWP) with Compaq Computer (CPQ), Andrew Neff, an analyst at
Bear Stearns, said H-P's stock could come under pressure. There is uncertainty
on the integration of the deal or uncertainty associated with voting down the
deal, and uncertainty "often has an adverse impact on multiples," he notes.
According to the analyst, it's too close to call what the outcome of a
shareholder vote will be. "On the one hand, Walter Hewlett is up against the
combined resources of Hewlett-Packard and Compaq; on the other hand, he has a
head start with around 20% of the shares in opposition of the deal." (DLF)
10:25 (Dow Jones) Lucent's (LU) bid to force Global Crossing (GBLXQ) to
immediately accept or reject equipment and network contracts with Lucent faces
opposition from a group of Global Crossing bondholders. Lucent's request "would
impose an unreasonable time constraint on the debtors to make this decision
given the infancy of these cases, the magnitude of the contracts at issue and
the effect of this decision on the administration of these estates," the
bondholders group said. The bondholders, who refer to themselves as the ad hoc
steering committee of bondholders, said that the company's decision to accept
or reject the contracts will likely have "significant ramifications" for the
estate and creditors. (CM)
10:17 (Dow Jones) Prudential says it hopes the SEC can get more information
out of Elan (ELN) than the brokerage firm has been able to. "Despite the
appearance of coming clean on accounting issues recently, there are many
questions yet to be answered," says analyst Tim Anderson. The stock looks cheap
(trading at 9x Pru's 2002 EPS view), but Anderson has "little confidence in our
forecasts, especially given the likelihood of an earnings restatement at some
point." Cuts price target to $14 from $22, and keeps hold rating. Shares off 6%
at $12.70. (TG)
10:05 (Dow Jones) Wholesale inventories down 0.6% in December. This decline
matches the fall in factory inventories. Unlikely to have much of an effect on
4Q GDP, if anything a slight upward revision. Suggests imports in Dec. were
probably subdued. (JM)
9:57 (Dow Jones) USD/JPY at highs for day as worries about the upcoming G7
meeting and disappointment with Japan's inability to turn around the economy
are leading the dollar higher, traders say. EUR is $0.8731, USD/JPY is Y134.54,
EUR/JPY is Y117.50. (JRH)
9:46 (Dow Jones) Banc of America's Chris Crespi says ONI Systems (ONIS) is a
survivor. The company has the balance sheet and product portfolio to make it
through telecom downturn and drive revenue growth when carrier spending
resumes. He says ONI is a pure play on the deployment and upgrade of metro
networks, which is where he expects spending will recover first. However,
Crespi cuts CY02 rev view to $165 million from $207.7 million and EPS view to
loss of 69c from 58c. Shares up 9% at $4.90. (TG)
9:35 (Dow Jones) High-yield bond mutual funds reported an $80.7 million
outflow during the week ended Feb. 6, according to market research firm AMG
Data Services. (JD)
9:26 (Dow Jones) With several heavyweights seeking to spiff up service, this
will be a very competitive year in fast-food, says Salomon Smith Barney analyst
Mark Kalinowski. He tabs Wendy's International (WEN) as a potential winner,
with Tricon Global (YUM) making strides. But Kalinowski says McDonald's (MCD)
"could be challenged to keep pace, as benefits from its efforts to improve
domestic operations may accrue more slowly than the Street would like to see."
(RLG)
9:15 (Dow Jones) Prudential bumps up slightly Wal-Mart (WMT) 4Q, 2001, and
2002 EPS views after above-plan January comps. Says the above-plan trend could
continue this year as Wal-Mart picks up share from Kmart (KM). Gross margins
may also get a boost this year in a more benign pricing environment. Keeps buy
rating, price target is $67. (TG)
(END) DOW JONES NEWS 02-08-02
11:43 AM |
