Repent, Ye Sinners
"In summary, Intel (INTC) remains one of our two best ideas and we reiterate our $88 price target over the next twelve months. Even though year-to-date, Intel is up 53% versus the Nasdaq which is down 4%, we continue to believe that its over performance will continue. We note that even since the downgrades began on September 6th Intel is down only 9% versus the Nasdaq down 6%. We urge you to not get shaken out of a great second half 2000 story because of seasonal fluctuations in demand and single data points in a typically back-end loaded quarter."
— Daniel Niles, Lehman Brothers, on Sept. 21, when Intel was trading at $63.06.
Closing price on Dec. 29: $30.25 (-52%)
"At current levels, we believe Pets.com (IPET) remains adequately funded until at least the second/third quarter next year.... Given its leadership position and large market opportunity, we continue to believe that IPET shares offer longer-term upside."
Price target: $10
— Michael P. Wallace and Stephen Tam, UBS Warburg, on Oct. 25, when Pets.com was trading at 59 cents.
Closing price on Dec. 29: 9 cents (-85%) (Pets.com closed its virtual doors on Nov. 7.)
"We believe we are seeing the inflection point at AT&T's (T) cable initiatives, going from high risk with little visibility of execution to what we now feel is a very doable undertaking with the prospect of high-return potential."
Upgrade to Buy from Neutral
12-month price target: $75
— Jack Grubman, Salomon Smith Barney, November 1999, when AT&T closed the month at $60.
"Our call today is to point out the continuation of what we have been doing all year long, which is lowering numbers in front of AT&T guidance and the Street. We are tired of waiting on guidance — it's time to take the bull by the horns."
Downgrade to Outperform from Buy
Price Target: $37
— Jack Grubman, Salomon Smith Barney, on Oct. 6, 2000, when AT&T was trading at $28.89.
Closing price on Dec. 29: $17.25 (-71% since November 1999)
"...[G]enerally we think the DLEC [data local exchange carrier] business model can still be quite lucrative owing to what we believe is a vast underestimation of broadband demand, a relatively underserved small business market, a favorable regulatory environment, attractive economics, and the opportunity to up sell subscribers higher speeds as well as a suite of value-added services.... And while Covad (COVD) still has significant funding needs to achieve free cash flow breakeven, like all DLECs, the trends shown in this quarter affirmed our belief it is the best poised to scale the business. We reiterate our Buy rating and yearend price target of $30."
— Douglas S. Shapiro, Banc of America Securities, on July 27, when Covad was trading at $17.69.
Closing price on Dec. 29: $1.66 (-91%)
"...[W]e continue to recommend the purchase of Lucent (LU) stock for three main reasons; (1) the company addresses high growth markets such as optical systems or data networking technologies (2) the company continues to maintain a #1 or #2 position in most of their product lines, and (3) we believe that spin off of the Microelectronics group into a separate company represents substantial value to shareholders. We are maintaining our Strong Buy rating on Lucent with a 12-month price target of $85, suitable for capital gains/higher risk accounts."
— George G. Hunt, Wachovia Securities, on July 26, when Lucent was trading at $48.31.
"We are upgrading Lucent to Buy from Hold based on our belief that the recent weakness in the shares has taken the stock to the low end of the potential valuation range of the three pieces of Lucent that will exist at year end. With near term expectations having been set to reasonable levels we see little in new news that is likely to drive the shares substantially lower. Meanwhile, we believe that a series of events including management changes, supplemental financial disclosure and the marketing of the new standalone entities will help generate improved sentiment towards the shares, potentially driving the price towards the $67 high end of our valuation range."
— Eric C. Buck, Wasserstein Perella, on July 30, when Lucent was trading at $45.12.
Closing price on Dec. 29: $13.50 (-72% for Hunt; -70% for Buck)
"We are maintaining our Long-Term Buy rating, as we continue to believe that the Xerox (XRX) franchise has considerable staying power. If we thought this was a story with perhaps irrecoverable relevancy to the markets it is addressing, we would hesitate to recommend the stock at any price. However, a franchise such as Xerox' does not dissolve that quickly, and there really is not that much of an issue with the strength of the product line. The price for that franchise is a sorry 9 times earnings, cheap enough to keep the rating while acknowledging that the upside will not come overnight."
— Daniel Kunstler, J.P. Morgan Securities, July 27, when Xerox was trading at $14.97.
Closing price on Dec. 29: $4.63 (-69%)
"We are initiating coverage of marchFIRST (MRCH) with an intermediate/long-term Buy.... The shares have plummeted over 70% since December due to concerns over integration challenges relating to the $7.1 billion merger of USWeb/CKS and Whittman-Hart [which created marchFIRST]. The current price more than reflects integration risk. The shares look undervalued on a comparable and DCF basis. As marchFIRST hits integration goals and growth projections, the shares should trade up to our $37 price objective.... But the market is valuing shares at a deep discount to competitors, fearing the challenges of integration. We think the risk/reward profile of an investment in marchFIRST is extremely compelling at these prices."
— Thatcher Thompson, Merrill Lynch, July 19, when marchFIRST was trading at $23.56
Closing price on Dec. 29: $1.50 (-94%)
"We reiterate our Buy rating on Apple (AAPL) and our price target of $80 based on a valuation of 2x the company's EPS growth rate of 20-25%, reasonable in view of its innovative products and strong product cycles, ownership of technology, strong balance sheet and financial management, increasing return on invested capital, and potential for further positive surprises."
— Andrew J. Neff, Bear Stearns, in a report titled "New Products Exceed Expectations; In Growth Mode; Use Sell-off as Opportunity," on July 20, when Apple was trading at $57.25.
"We continue to rate Apple Outperform with a $70 price target. We think Apple shares are cheap in light of what we believe is a healthy macro PC environment for the next 9 to 12 months and its P/E valuation of 25 times [estimated 2001 earnings per share].... In our view investors still underappreciate Apple's staying power. We believe that Apple is on track to post 20% year-over-year revenue and net income growth, has a terrific product pipeline and incredible customer loyalty/support. These are all differentiators in the PC business."
— Gillian Munson, Morgan Stanley, also on July 20.
Closing price on Dec. 29: $14.88 (-74%)
"As one of the leading online sites dedicated to women, an attractive and desirable demographic group, we believe that women.com (WOMN) will be one of the leading players capturing a significant share of the market's audience and ad dollars. The growth of women online, coupled with their large buying power, presents a significant opportunity to provide content tailored to the interests and needs of women using the Web and to attract advertisers and merchants that target this attractive group. In our view, women.com, as a leading portal dedicated to women, presents an attractive investment opportunity. We believe that the company will find multiple ways to leverage its traffic/users with advertising and e-commerce opportunities targeted at this group."
Long-term Outperform.
Long-term price target: $22.
— Kathleen Heaney, BlueStone Capital, on July 27, when women.com was trading at $4.31.
Closing price on Dec. 29: 22 cents (-95%)
"...[W]ith Fiscal 2001 less than six months away and, in our opinion, the very real potential for a purchase of the company by a leading competitor (at levels we estimate could be over 5x Bradlees' current value), the risk/reward ratio is among the most appealing in our universe."
— Eric M. Beder, Ladenburg Thalmann, in a report titled "Bradlees Unfairly Trading at Bankruptcy Levels; Risk/Reward Remains Compelling; Reiterating STRONG BUY Rating and $15 Price Target" on Aug. 18, when Bradlees was trading at $3.
"In light of the planned liquidation of the company, we are eliminating our ratings and estimates."
— Eric M. Beder, Ladenburg Thalmann, on Dec. 27.
Last quoted at 22 cents, under ticker BRADQ (-93%)
"Although I expect better performance through the fourth quarter and into next year, the year to date returns of the Dow Jones Industrial Average, S&P 500 and Nasdaq composite have been below my revised forecasts. While the Nasdaq composite remains 18% above year-ago levels, it is unlikely that the Nasdaq composite will reach my year-end target of 5,500. Therefore, I am reinstating my original forecast target of 4,300 for the Nasdaq composite index by year-end. I am leaving my S&P 500 and Dow targets at 1,625 and 12,500, respectively. I believe that excellent third and fourth quarter results will be the primary catalyst in the near term and as companies begin to report earnings in the coming weeks. At that time analysts and investors should become increasingly comfortable with forecasts for top line growth, profitability and improving backlogs."
— Joseph Battipaglia, Gruntal & Co., on Oct. 9.
Nasdaq close on Dec. 29: 2470.52 (-43% from year-end target)
S&P 500 close on Dec. 29: 1320.28 (-19% from year-end target)
DJIA close on Dec. 29: 10786.85 (-14% from year-end target)
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