TriQuint Semi (TQNT) 24.14 -1.86: CIBC World Markets upgrades to STRONG BUY from BUY and ups price target to $60 from
$40 due to merger with Sawtek; as largest merger in the wireless component space, creates a powerhouse in RF and GaAs components
with a very diversified customer and application base; transaction is expected to close in 3Q01 and will be immediately accretive to
earnings; firm increases FY01 proforma revenue estimate from $306 mln to $418.6 mln and FY02 from $413 mln to $605 mln.
Whole Foods (WFMI) 54.01 +0.85: UBS Warburg upgrades to BUY from HOLD rating and price target of $60; believes company
can beat its own sales targets for second half of 2001 and that, longer term, an increased focus on costs could further improve profitability;
also, lower property prices (due to a weakening economy) have resulted in a healthy real estate pipeline, and this may have a beneficial
impact on future returns; sale of NatureSmart signals a renewed focus by management on its core business.
11:00 -- 12:00 ET (Updated throughout the hour)******
United Micro (UMC) 9.50 -0.08: Banc of America Sec initiates coverage with a BUY and a 12 month price target of $23; UMC has
suffered through Q1 of FY01 as the entire semiconductor industry has undergone a significant contraction; management guidance is for 2Q
to be the trough in revenues with a modest recovery in the second half of FY01; firm says UMC is well positioned for anticipated recovery
in the IC market.
Tower Semicon (TSEM) 11.01 +0.47: Banc of America Sec initiates coverage with a BUY rating and price target of $22; Tower is a
wafer foundry specializing in CMOS processing; says company is at a major inflection point; the current downturn in the semiconductor
industry has had a strong impact on foundries, and firm is not projecting a strong revenue growth year for Tower.
Oracle Corp (ORCL) 15.78 -0.15: W.R. Hambrecht initiates coverage with a MARKET NEUTRAL; believes Oracle is great
company whose stock is currently overvalued; concerns include: Oracle's competitive strategy, which firm believes elevates company's risk
profile significantly in a slower-growing software market, and Oracle's P/E/G premium, which firm believes is too high given company's
elevated risk profile; firm's valuation analysis indicates that fair value for the stock is about $14.
Siebel Systems (SEBL) 45.18 +2.47: W.R. Hambrecht initiates coverage with a BUY rating and price target of $60 as firm is
optimistic about Siebel's growth prospects and finds the valuation compelling; cites company's leverage in an already rapidly growing
market for CRM software and its position in what firm terms to be the "suite spot" of the CRM applications market.
Salomon on Homebuilding : Salomon Smith Barney downgrades a host of small-cap homebuilding stocks, saying the current excitement
in the area is short-sighted, as national housing figures are likely to weaken by mid-year, if not sooner; believes downside risk in many
names now outweighs upside potential, and recommends using any continued strength in the group to take profits; firm lowers ratings
Schuler Homes (SHLR) and M.D.C. Holdings (MDC) to OUTPERFORM from BUY; cuts Beazer (BZH), Del Webb (WBB),
Hovnanian (HOV) and Ryland Group (RYL) to NEUTRAL from OUTPERFORM.
Applied Materials (AMAT) 50.18 +0.29: WF Van Kasper upgrades to STRONG BUY from BUY; while the current downturn in the
semiconductor equipment industry could be the most severe in industry history, firm says two important timing indicators are now turning
positive: the sequential rate of decline in new orders appears to be decelerating and could even show slight sequential improvement over the
next couple of months, and capacity utilization at the Southeast Asian foundries should bottom by June at 40-45%; new price target is $81,
up from $72.
10:00 -- 11:00 ET (Updated throughout the hour)******
ITT Industries (ITT) 46.15 +0.11: Bear Stearns initiates coverage with an ATTRACTIVE rating and price target of $57; cites
on-going favorable business mix shift, multiple positive secular growth drivers, and new management change; possible risks come from
concern over a weak manufacturing economy and relatively short historical track record; notes that ITT business mix is relatively more
defensive than average industrial company, which firm thinks is a strength in this environment; introduces EPS estimates of $3.25 in 2001
and $3.75 in 2002.
Atlas Air (CGO) 21.80 -0.10: ABN AMRO downgrades to HOLD from ADD due to the expected slowdown in growth; believes
company's earnings growth potential will be negatively affected as long as the world economy remains sluggish; firm lowers 2002 EPS
forecast to $2.33 from $3.00 with the elimination of the expectation of any excess flying for next year.
BEA Systems (BEAS) 37.06 +3.02: ABN AMRO upgrades to BUY from ADD based on three key factors: (1) upward revision to
revenue and EPS estimates; (2) increasing market share for BEA Systems in the application server market; and (3) a firming of IT budgets
and the economy in the second half of this year. For FY02, firm raises total revenue estimate to $1.18 bln from prior estimate of $1.13 bln;
raises EPS estimate to $0.42 from $0.40.
Qwest Comms (Q) 37.90 +0.25: Pacific Crest initiates coverage with a STRONG BUY; citing premium growth opportunities, key
alliances with IBM and Microsoft, and unrecognized merger synergies; believes Qwest will be the primary beneficiary of the migration of
the enterprise into Internet and intranet communications in the coming decade.
Rite Aid (RAD) 8.45 +0.38: Drugstore chain announces details of a comprehensive $3.0 bln refinancing package that includes a
commitment for a new $1.9 billion senior secured credit facility fully underwritten by Citibank NA, J.P. Morgan Chase, CSFB and Fleet
Retail Finance; package is subject to customary closing conditions and the issuance by Rite Aid of $1.05 billion in new debt or equity
securities, of which $527 mln has already been committed or arranged; see press release.
Alpha Ind (AHAA) 24.80 -0.62: Pacific Growth Equities downgrades to long-term BUY from BUY due to an increasing number of
concerns surrounding the wireless markets including: 1) the relatively anemic performance of the gallium arsenide (GaAs) market so far this
quarter; 2) slower adoption rates of next generation technologies; and 3) an increasingly competitive environment surrounding modules;
believes that at these levels AHAA is priced for perfection and the competitive landscape has increased with announced merger of Sawtek
and Triquint.
Taiwan Semi (TSM) 19.74 -0.39: Banc of America initiates coverage with a BUY rating and price target of $27; says company has
best-established track record of profitability in the group, and views it as key holding for semiconductor investors; notes that the foundry
sector is a deep cyclical within technology since it is directly tied to wafer supply, as is typical in any cyclical business the best buying
opportunity is always in the worst periods for fundamentals; firm is confident that TSM will emerge as good or better positioned than it was
prior to the downturn, so would use any weakness to build positions.
09:30 -- 10:00 ET (Updated throughout the hour)******
Serono SA (SRA) 23.11 -0.49: Prudential initiates coverage on Swiss biotechnology company with a STRONG BUY rating and price
target of $32 as firm believes company is poised for significant EPS expansion, driven mainly by its MS drug, Rebif.
Pharm Product (PPDI) 30.60 -1.04: Provider of discovery and development services and products for the pharmaceutical and
biotechnology industries reconfirmed earnings guidance for the remainder of 2001. Earnings per diluted share for 2001, adjusted for the
one-for-one stock dividend, are expected to be in range of $0.18-$0.19 for Q2, $0.19-$0.20 for Q3, $0.20-$.021 for Q4, and
$0.84-$0.87 for full year (all roughly in line with consensus estimates); see press release.
H.B. Fuller Co (FULL) 45.16 +1.02: Merrill Lynch upgrades to near-term ACCUMULATE/ long-term BUY from near-term
NEUTRAL/ long-term ACCUMULATE; firm is intrigued by FULL's valuation which remains well below historical averages and its
specialty chemical peers; 12-18 month price target of $60 is based on a 14-15x P/E; believes Fuller is nearing the turning point in earnings
and looks for August quarter EPS to mark a shift from negative EPS comparisons to positive.
Phillips Petro (P) 62.32 delayed: Merrill Lynch upgrades to near-term BUY from near-term ACCUMULATE rating with price target of
$80; says Phillips shares reacted negatively to the acquisition of Tosco (TOS) on 2/4/01 and have lagged the performance of the group;
believes Phillips represents a less exploited play on the secular recovery occurring in refining; company will have the highest leverage to
U.S. refining margins among the major oil group; estimates the Tosco acquisition will raise P's 2002E EPS to $7.50 from $7.15.
BEFORE THE OPEN (Updated throughout the hour)******
Campbell Soup (CPB) 29.95: Reports Q3 earnings of $0.30 a share, in line with the First Call consensus, vs year-ago earnings of $0.32;
revenues rose 3.2% to $1.44 bln from a year-ago of $1.39 bln. Company also warns for Y01, expecting $1.60-1.64 vs current First Call
EPS estimate of $1.64; cites projected tighter retail inventories and company's decision to proceed with business-building initiatives in
fourth quarter that had not been previously planned for the year, including quality enhancements, research and development initiatives and
new business development efforts; see press release.
QLogic (QLGC) 42.51: Banc of America Sec upgrades to BUY from MARKET PERFORM rating with price target of $55; believes
QLogic is well-positioned for sequential growth starting in September quarter given its strong product momentum, including (1) 2 gig
upgrade cycle in its fabric switch business, (2) strengthening relationship with Sun Microsystems, and (3) emerging storage router
opportunity with Cisco Systems.
Certicom Corp (CERT) 9.83: Provider of mobile e-business security announces strategic licensing agreement with First Data Corp
(FDC) in which First Data licenses Certicom's elliptic curve cryptography (ECC) and plans to incorporate the highly efficient technology in
a number of areas, including smart cards; see press release.
Packaging Corp (PKG) 14.24: Producer of containerboard and corrugated packaging products announces the initiation of a stock
repurchase program to buy up to $100 mln of the company's outstanding common stock over next 12 months; see press release.
Navistar Intl (NAV) 27.02: Reports Q2 earnings of $0.05 a share, $0.01 better than the First Call consensus of $0.04, vs year-ago
earnings of $1.58; revenues fell 24.9% to $1.79 bln from a year-ago of $2.39 bln; CEO reiterated that the steps taken last year to
strengthen the company and reduce costs played an instrumental role in the return to profitability; however, that the weakness in new and
used truck pricing and shipments that began nearly a year ago continues unabated; see press release.
Hyperion Solutions (HYSL) 15.37: Business analysis technologies company announces measures to reduce expenses to address the
changing economic environment and as part of a reassessment of its investment priorities; including a reduction in workforce of up to
15% of Hyperion's global staff, and other expense related items; see press release.
ASM Lithography (ASML) 24.40: Goldman Sachs downgrades to MARKET OUTPERFORM from RECOMMENDED LIST based
on firm's macro view and not a specific company contact; firm continues to regard ASML as one of the top quality semiconductor
equipment names globally, but feels shares should trend a little weaker as the outlook for 2H 2001 weakens; sees little improvement from
depressed levels in 1H 2002.
Federated (FD) 44.09: Reports Q1 earnings of $0.42 a share, $0.06 better than the First Call consensus of $0.36, vs year-ago earnings
of $0.41; revenues fell 5.2% to $3.82 bln from a year-ago of $4.03 bln; while company was pleased with total result, the performance of
its department store segment in the period was disappointing; "We think a number of factors contributed to the performance of our
department stores, including weak sales and high markdowns, compounded by escalating energy costs and electricity shortages in
California," said CEO; see press release.
Check Point Sftwr (CHKP) 54.91: Lehman Brothers downgrades to BUY from STRONG BUY; 12-month price target from $110 to
$70; increasing competition from Cisco and others in service provider VPN market amid economic slowdown, likely to cap upside to
numbers and compress multiple over time; absence of CHKP in recent major service provider deals suggests company is at competitive
disadvantage in the high-end VPN market, calling into question long-term outlook on CHKP's ability to maintain dominance in VPN
market and sustain premium growth rates; recent price promotions suggest near-term customer demand remains an issue reducing level of
revenue visibility over the near-term; recent bankruptcies in service provider channel represent risk to new revenue opportunities.
TD Waterhouse (TWE) 11.36: Reports Q2 earnings of $0.05 a share, in line with the First Call consensus, vs year-ago earnings of
$0.23; revenues fell 42.1% to $282.80 mln from a year-ago of $488.70 mln. trades per day were 124,200 compared to 149,100 last
quarter, a 51% decrease from Q2 last year; company says market conditions remained volatile in the last quarter; plans to continue to take
advantage of attrition to reduce the size of global workforce, extract operating efficiencies through technology, and use segmentation to help
make every customer relationship profitable-all without any significant restructuring charges; see press release.
Krispy Kreme (KREM) 49.40: Reports Q1 earnings of $0.20 a share, $0.03 better than the First Call consensus of $0.17, vs
year-ago earnings of $0.13; revenues rose 24.1% to $87.92 mln from a year-ago of $70.87 mln; gives guidance for FY02 of $0.77 vs
mean estimate of $0.70; also earnings estimate for FY03 of $1.00 vs mean estimate of $0.87; see press release.
Goldman Cuts Comm IC : Goldman Sachs downgrades communications chip stocks Applied Micro (AMCC), PMC-Sierra (PMCS),
Vitesse Semi (VTSS) to MARKET OUTPERFORM from TRADING BUY; more likely to see adverse news flow out of sector during
the next six weeks; while there is no change to firm's view that these can be very interesting trading stocks given the volatility, firm believes
the high valuations, limited visibility on a sustainable recovery, and the lack of near-term catalysts beyond SuperComm will likely cause the
trading range to trend lower in the near-term. |
