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Thomson I-Watch Morning Update
thomsoninvest.net
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Market-Moving News
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* The first rate hike by the Bank of Japan in nearly a decade had
little impact on Tokyo stocks in overnight trading. The Nikkei Index
edged up 0.2% to 16,154, while trading volume eased. Friday's rally
in US equities helped bolster gains. Hong Kong stocks struggled
without any fresh market-moving news. The Hang Seng Index fell 1.3%
to close just below the crucial 17,000 level at 16,998.
* London's FTSE 100 has gained 0.9% to 6,444 on relief over a mostly
in-line producer prices report. Drugs and telecom issues are leading
the market higher. In Frankfurt, the DAX has moved up 0.6% to 7,365
on thin trading. Meanwhile, the CAC 40 has shot up 1.0% to 6,619.
* The S&P Futures are trading up 2.5 points compared to a Fair Value
of 0.7 points, indicating a positive to start to the week.
* Business inventories rose 0.6% in June, declining from May's
unexpectedly large 0.9% increase. The results were in-line with
economists' expectations. The report will not have a significant
impact on the markets as there is a significant time lag and the
components to the report were available prior to the release.
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Stocks to Watch
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* Analyst Recommendation Revisions:
Lehman Brothers raised ImClone Systems (IMCL) to an "Outperform"
rating from a "Neutral" rating on the heels of the company's
positive FDA meeting. Lehman also increased its price target to $96
from $73.
Credit Suisse First Boston upgraded Sonoco Products (SON) to a "Buy"
rating, citing the decline in raw material price cycles, potential
long-term downturn in polyethylene prices, lower waste paper prices,
and the management shakeup. CSFB believes these factors can lead to
price appreciation over the next year.
Salomon Smith Barney lowered its rating on SLI Inc (SLI) to an
"Outperform" rating, noting that the structure of the company is
under review and that earnings visibility is limited. Merrill Lynch
lowered its opinion on Paychex (PAYX) to an "Accumulate" from "Buy"
on valuation.
Merrill Lynch also cut its long-term rating on Apex Silver (SIL) to
an "Accumulate" from a "Buy," on the premise that lower prices during
construction and development time will slow the stock's price
appreciation. Merrill also reduced Galileo International (GLC) to a
"Neutral" rating from "Accumulate" based on GLC's lackluster bookings
growth outlook.
ABN Amro lowered Pinnacle West Capital (PNW) to an "Outperform" rating
from a "Buy" due to recent price performance. The analyst also cited
near-term uncertainty over court appeals to the state's electric
restructuring plans and potential couterbids to PNW's proposed
generation acquisition from Edison International (EIX). ABN Amro also
reduced its rating on Telescan (TSCN) to "Outperform" from "Buy" due
to execution issues and potentially volatile outside market factors.
The firm cut its price target to $9 from $20 and reduced its FY00 and
trimmed its FY01 earnings estimates.
* Institutional Money Flows
Investors' positive interest rate outlook lifted insurance-related
shares Friday. PGR climbed $2 15/16 to $73 7/8, AFL jumped $1 7/8 to
$56 5/16, MET gained $1 to $24, and CI rose $3 3/8 at $105 3/16.
Computer hardware issues fell back Friday on DELL's disappointing
revenue figures. DELL plunged $4 1/16 to $37 11/16, HWP dropped $2
1/4 at $110, SUNW lost $1 3/4 to close at $112 3/16, and AAPL slipped
$1/8 to $47 11/16
* News Corp (NWS) will buy Chris Craft Industries (CCN) and its
subsidiaries BHC Communications (BHC) and United Television (UTVI) for
$5.35 billion, or $2.13 billion in cash and roughly 73 million
American Depository Receipts. Under terms of the deal, News Corp will
swap 1.1591 of its ADRs and $34 per CCN share. CCN shareholders can
also opt for $85 cash or 1.9318 ADRs. News Corp offered BHC
shareholders $66 cash plus 2.2278 NWS ADRs, $165 cash, or 3.7131 NWS
ADRs for each BHC share. UTVI shareholders can choose $60 cash and
2.0253 ADRs, $150 cash, or 3.3755 ADRs per UTV share. The 10
acquired television stations will be operated under Fox Television
Stations, which is part of News Corp's majority owned unit Fox
Entertainment Group (FOX). FOX will issue 122.2 million shares to
News Corp in exchange for the assets, raising NWS' equity stake to
85.25%. NWS acquired the assets from rival Viacom (VIA). NWS ended
last week at $49 3/4, CCN closed at $62, BHC ended at $141 3/4, and
UTVI closed at $136. In after-hours trading on Instinet, CCN jumped
$15 1/2 to $78.
* Chiron (CHIR) will acquire PathoGenesis (PGNS) for $38 1/2 per share
in cash, or about $700 million. CHIR will gain access for PGNS' 5
major commercial products, extending CHIR's treatment offerings for
infectious diseases. Chiron expects the deal to close in 3Q or 4Q
and believes the acquisition will not dilute earnings after 2001.
PGNS closed Friday's session at $32 3/4, while CHIR ended at $48 5/8.
* Broadcom (BRCM) announced plans to acquire privately held NewPort
Communications in a $1.24 billion stock deal. BRCM will issue 5.5
million class A shares and book a 3Q charge for the acquired in
process R&D. The deal broadens BRCM's fiber optic reach.
* PECO Energy (PE) will pay $682 million for 49.9% of Sithe
Energies' North American operations. Sithe said that Peco has the
option to purchase the remaining 50.1% for the North American
operations 2-5 years after the close of this transaction. PECO will
create a new company called Exelon Corp, with the ability to generate
46,000 MW power, according to The Wall Street Journal.
* CommScope (CTV) said it expects 3Q earnings between $0.38-$0.43,
below the First Call/Thomson Financial mean forecast of $0.45.
CommScope attributed the shortfall to difficult pricing patterns
and below expected sales in local area network and wireless/other
telecom products.
* Lowe's (LOW) booked FY01 2Q earnings of $0.73, rising $0.13 from
last year's results. The results were in-line with the First Call/
Thomson Financial consensus estimate.
* The following firms are expected to report earnings today:
Consensus
Company Ticker Estimate+
Automatic Data AUD 0.35
Buckeye Techno BKI 0.44
Elcor Corp. ELK 0.32
Golf Trust of GTA 0.68
Hot Topic HOTT 0.26
Magellan Hlth MGL 0.17
Network Applnc NTAP 0.08
Reliance Group REL (0.07)
Rouse Co. RSE 0.78
Sauer Inc. SHS 0.33
Valspar Corp. VAL 0.59
+ Source: First Call/Thomson Financial |
