RECAP & STOCKS TO WATCH FOR FRIDAY, 1-5-01
The markets woke up the day after with a “euphoria hangover,” looking for direction and trying to hide the pain of more earnings warnings. It may have been boring and choppy, but it was a textbook example of a healthy calm after Wednesday’s storm. The markets continued to digest the Fed’s 50 basis point cut that left traders surprised and flabbergasted.
The Nasdaq Composite slipped almost 50 points to close at 2,566. Volume was a healthy 2.6 billion shares, with 92 new highs compared to 47 new lows. Blue chips slipped as well as the Dow lost 33 points to finish at 10,912, after climbing above the 11,000 level for the 2nd straight day. Volume on the Big Board was 2.1 billion shares, the heaviest ever, with 272 stocks making new highs compared to 14 new lows.
Goldman Sachs chief strategist Abby Joseph Cohen said today that the S&P 500 is roughly 20% undervalued, and maintains a 12-month price target of 1,650, a 23% increase from current levels.
She is also again suggesting an overweight position in technology.
Overall, the markets held up tremendously well after such a big run on Wednesday. A healthy scenario is a period of consolidation, like we saw today, before the next leg up. Most of the bad news, including earnings warnings, has been discounted, and market breadth is improving. Most importantly, it is what it is. We don’t need to concern ourselves with the why so much as the what. The markets are moving higher.
From a technical standpoint, support on the Nasdaq Composite stands at 2,250-2,200, with resistance at 2,640 and 2,900. The Semiconductor Index (SOX) penetrated resistance at 635 yesterday, and held that level today as it becomes new support. Chart of the SOX on a daily basis:
tradewindsonline.net
Sapient (SAPE): Company warns for Q4. Sees EPS of $0.10 vs. current EPS estimate of $0.12. Expects revenue of $139 mil vs. $143 mil consensus estimate. Sapient attributed the results to two principal factors: slower, more deliberate spending on the part of its large, global clients and continued reduction in the proportion of its revenues derived from dot.com clients.
Next Level (NXTV): Company warns for Q4. Sees loss of about $0.22 per share vs. current EPS estimate of ($0.12). Company cites reduced revenue from Qwest and slower than anticipated customer development in Korea.
Keynote Systems (KEYN): Company warns for Q1. Sees revenues below estimate vs. current EPS estimate of $0.11. Revenues are expected to be $13.0 to $13.2 mil, which is lower than the $14.0 to $14.5 mil in revenue the company previously expected. Company cites a decline in subscription revenue from the Internet service provider business.
PC-TEL (PCTI): Company warns for Q4. Sees revenue below estimates due to the rapid deterioration in PC demand. PCTI expects to report revenue of approximately $16.5 to $17.5 mil. Company expects Q4 loss of $0.07 to $0.10 per share vs. consensus estimate of $0.20 profit. Company says weak demand creates uncertainty for the first half of 2001.
Brooktrout Tech (BRKT): Company warns for Q4. Sees revenues of $33-35 mil and EPS of approximately $0.03 to $0.05 versus $0.31 estimate. Company cites the general slowdown in the telecommunications equipment market, as well as the lower than expected performance of Brooktrout Software.
Semtech Corp (SMTC): Company warns for Q4. Sees revenues below estimate and flat with Q3. Company still expects to achieve analysts' consensus earnings estimates of $0.23
Brooks Automation (BRKS): Company announces that it has received a multi-million dollar order from a top ten semiconductor company to provide the company with 300mm sorter technology.
Avery Dennison (AVY): Company warns for Q4. Sees $0.66-0.68 vs. current First Call EPS estimate of $0.69. Revenue for the fourth quarter is now expected to be in the range of $930 million to $940 million, which is approximately three to four percent lower than previously announced forecasts. Cites sluggish economic conditions exclusively in North America.
MONY Group (MNY): Company warns for Q4. Sees EPS below $0.51 vs. current First Call EPS estimate of $0.56. Believes the shortfall to be up to $0.10 per share and is primarily due to a mark- to-market adjustment in assets backing certain employee benefits programs, as well as a decline in market value of assets under management
Guidant Corp (GDT): Company warns for Q4. Sees revs below estimate and says on the basis of the revenue shortfall, the company expects a negative impact on earnings per share of between two and three cents vs. First Call EPS estimate of $0.43. |
