MARKET TALK: Turns Out Goldman Is Worried About Wireless
04 Mar 12:12
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
(Call Us: 201 938-5299; All Times Eastern)
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12:12 (Dow Jones) AT&T Wireless' (AWE) comments Friday about increasing
pricing pressure has spooked Goldman Sachs into downgrading the U.S. wireless
sector to market underweight. Specifically, Goldman lowers its ratings and
estimates on AT&T Wireless (AWE), Nextel Communications (NXTL), Nextel Partners
(NXTP) and Sprint PCS (PCS), all of which are down significantly, with NXTP off
the most, percentage-wise, down 9%. "Although short-term fundamentals remain
strong at NXTP, we are increasingly concerned about Nextel Partners' ability to
grow into its capital structure to pay down its large debt obligation." (GS)
12:03 (Dow Jones) Lehman looks for non-manufacturing ISM index to move higher
in February, like nearly every other purchasing managers index, rising to 51.5
from 49.6 in January. Employment index will probably stay below the 50
threshold for the 12th consecutive month. Thinks factory orders will be up 2.1%
in January. Manufacturing inventories likely to have fallen 0.3%.(MCG)
11:54 (Dow Jones) "We are likely to exit the Enron era with better disclosure
of management decisions and their marked-to-market cost, tighter reporting
timelines, greater investor and regulatory scrutiny of accounting reports, and
stricter guidance designed to encourage common sense accounting rather than a
simple adherence to a regulatory checklist," say Lehman Brothers analysts in
their "Washington Weekly" report. (JCC)
11:46 (Dow Jones) In tennis as in stocks, the follow-through is crucial, and
all eyes are on how stocks do Monday after Friday's rally. Bullish calls traded
actively during Friday's rally, and the CBOE's equity put/call ratio fell to
0.53, lower than any reading all February and the first time in 11 sessions
this ratio's 21-day moving average has moved lower, to 0.725, according to
Schaeffer's Investment Research. Monday morning, defensive puts started out
active as investors stayed cautious, but call trading is catching up as stock
gains add up. The CBOE's equity put/call ratio began to ease from near 0.70
early on to about 0.60 recently. (KT)
11:39 (Dow Jones) Deutsche Bank says bond investors are putting "Enronitis"
behind them, looking more to prospects for economic recovery and compelling
relative value opportunities. But, spread volatility remains and investors are
wary. Recommends investors take advantage of relatively wide spreads in Tyco
International (TYC) and Bank of America (BAC). (MCG)
11:28 (Dow Jones) Stocks holding onto sizable gains in a nearly
all-encompassing rally. A diverse group of industries make up the top five:
Internet services, auto manufacturing, land transportation equipment, brokers,
and electric components and equipment. Only a dozen or so groups are losing
ground (one guess which is the worst acting...yes, wireless, again). Speaking
of wireless, check out these returns: down 18% in past week, 22% in past month,
49% in past three months, 51% in past six months, and 61% in the past year.
DJIA up 147 at 10515, Nasdaq Comp jumps 34 to 1836, and S&P 500 advances 13 to
1144. Investors have decided to start embracing the strong economic data of
late, the experts say. (TG)
11:20 (Dow Jones) At current price of 97.97, July fed funds are pricing in a
100% chance of a 25-BP rate hike and a 12% chance of a higher rate hike at the
June 25 meeting, according to off-floor experts. (ZHS)
11:11 (Dow Jones) Lehman analyst Dan Niles says chip maker Intel (INTC) will
narrow the range of its revenue target for the 1Q when it holds a mid-quarter
update after the close Thursday. "We believe the revenue range of $6.4 to $7
billion will be narrowed with a midpoint of $6.6 to $6.7 billion, with the
high-end gone," says Niles. Niles adds that the bigger issue in his mind is
Intel's 2Q, saying current backlog cancellation will likely drive a sequential
decline in the 2Q versus current expectations of sales up 1%. INTC up 2.1% at
$31.64. (DLF)
11:05 (Dow Jones) The stock surge is no help for the dollar, which continues
to struggle against the euro and the yen. Though euro has managed to hit
$0.8682 as a high today, it needs to prove it can hold that level before taking
another step up, analysts say. "All we did was rebound" after holding last
week's low, says HSBC's Marc Chandler. "It's just reinforcing that we're in a
range." USD/JPY at Y132.05. (JEN)
10:56 (Dow Jones) Prudential's Ed Keon is reversing his mid-January call to
tilt toward value and underweight tech, saying that, despite concerns about
tech earnings and valuation, an equal weight of tech and a leaning toward
growth is warranted. The market's reaction to Friday's positive economic
reports signals a shift toward greater optimism and a shift away from the
Enron-induced hand-wringing over earnings. "If we are right that the market is
poised for a rally and that greater optimism might lead to better growth stock
performance, then tech might outperform," Keon says. (TG)
10:47 (Dow Jones) 3M's (MMM) operating results in the latter part of 2002
will not improve as much as others anticipate, says Lehman Brothers, which
lowers its 2002 EPS estimates by 35c to $4.40 and its 2003 estimates by 30c to
$4.85. The firm says the lowered views "reflect our renewed concern about
international economies (including Europe and Japan, where business continues
to be sluggish) affecting most of 3M's businesses." The firm reiterates its
market perform rating. 3M up 0.2% at $120.51 (GS)
10:35 (Dow Jones) There are three airline IPOs in the hopper for this year:
JetBlue, ExpressJet and Pinnacle. That's an unusually high number, and for good
reason. Airline IPOs are notoriously stinkers. In fact, there have been 66
domestic airline IPOs, and only eight currently trade above their offering
prices, according to Thomson Financial. The last airline IPO was back on Dec.
5, 1997, when Midway Airlines (MDWYQ) came public. Midway filed for Chapter 11
bankruptcy protection in August. (RJH)
10:27 (Dow Jones) Whether yen repatriation is really a major factor ahead of
the Japanese fiscal year end in March is a topic of contention among analysts.
Now that the flows data are in for December, at least it's definitive that Dec.
was not a month for net inflows, Citibank research shows. Net in Dec. was a
$3.6 billion outflow from Japan to the U.S. (JEN)
10:22 (Dow Jones) Another Wall Street analyst is out with a positive call on
eBay (EBAY). Deutsche Banc Alex. Brown's Jeetil Patel is raising his rating on
the stock to strong buy from buy. The analyst says eBay's U.S. business should
grow 35% to 55% year-over-year in coming quarters, driven by listings gains and
increased pricing. He also says the company should benefit from more large
enterprises embracing it as an alternative distribution channel. Last Thursday,
Morgan Stanley's Mary Meeker raised her rating on eBay after the stock hit its
lowest close since October. eBay shares recently at $57.02, up $2.16 or 4%.
(RS)
10:09 (Dow Jones) King Pharmaceuticals' (KG) shares represent "good value at
a reasonable price" and the "risk-reward mix is ideal for the current
investment environment," says Merrill analyst Gregg Gilbert, who upgraded the
shares to intermediate-term strong buy from buy. King shares do not reflect the
strong revenue and earnings growth over the next year or two, which will be
driven by blood pressure drug Altace and hypothyroid treatment Levoxyl. He
would not be surprised if King uses some of its $1 billion cash war chest to
acquire products or companies, but added that the money could also be used to
make share repurchase programs if the stock remains at depressed levels. Shares
up 1.9%. (BMM)
(END) DOW JONES NEWS 03-04-02
12:12 PM |
