Is this why CPQ is down 2% while AAPL and HWP up 3% ?
I thought it was HWP that was downgraded today :^(
December 07, 2000 11:52
Morgan Stanley Says Compaq Attractive L-T, Sees 'Bumpy' N-T (CPQ)
(NewsTraders.com)-- Morgan Stanley Dean Witter analyst Gillian Munson today said he views Compaq Computer (CPQ) as an attractive long-term investment, however, the near term may prove to be "bumpy" for the world's largest supplier of computing systems.
Munson estimated just a few weeks ago that the probability for Compaq missing earnings estimates at 20%, however, recent developments within the industry cause him to believe the company's earnings risk is rising.
"Our checks of the marketplace indicate that the situation isn't bad but neither does it offer solace," said Munson, adding that some of the earnings risk is already reflected in Compaq's stock price.
Investors' jitters about PC stocks have mounted of late following recent earnings warnings from Apple Computer (AAPL) and Gateway (GTW), which caused the sector to slump further.
On a positive note, the Morgan Stanley analyst said his downside math analysis shows that personal computers aren't the real driver of EPS for Compaq: equal revenue from the company's enterprise line has twice or three times the effect on per-share earnings of that from PCs, in his opinion.
"It is important that CPQ has many earnings levers, in our view," the analyst said.
Munson is maintaining an "outperform" recommendation on the Houston-based company with a $40 price target.
Recently, Compaq shares were going for $19.94, down $0.16 intraday.
Copyright 2000 NewsTraders Inc. All Rights Reserved 11:51 Thursday, December 07, 2000
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