MARKET TALK: Hospital Companies Could See Nice Surprise
31 Jan 12:34
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
(Call Us: 201 938-5299; All Times Eastern)
MARKET TALK can be found using code N/DJMT
12:34 (Dow Jones) Publicly-traded hospital companies could report
higher-than-expected profits next year, depending how much Medicare
reimbursement rates rise in fiscal 2003. President Bush is expected to present
his fiscal 2003 federal budget proposal on Feb. 4. Sources cited by Merrill
Lynch analyst A.J. Rice said hospitals should be pleased, adding that the
proposal is not expected to include any effort to limit increases to the
Medicare inpatient reimbursement rate over the next few years. When the 2003
fiscal year begins on Oct. 1, it is possible that hospitals could receive as
much as a 3% increase in reimbursement rates. And since Rice's long-term
forecasts for investor-owned hospital chains call for a rate hike of 2%, a
better-than-expected reimbursement rate could lead to an upside earnings
surprise in 2003. (JJO)
12:21 (Dow Jones) The covered unemployment rate that measures the total
number of jobless receiving unemployment insurance benefits as a percentage of
all the workers covered by the program declined to 2.6% in the week ended Jan.
12 and stayed there in the following week. The Jan. 12 week was the survey week
for the January employment report and the rate was below the 2.9% level in the
December survey week and below the 3.1% peak recorded in the November survey
week. (JM)
12:09 (Dow Jone) Nymex heating oil bounces, lending support to rest of
complex, as ice storm plagues Midwest, and intense cold spreads in the northern
quarter of the Northeast and the deep South. Natural gas rise supportive, and
shortcovering and new buying cited. +94 pts to 51.85c/gal (MSX)
11:53 (Dow Jones) Utility Oklahoma Gas & Electric, an OGE Energy (OGE) unit,
has been hammered by a severe ice storm in the last 24 hours. About 185,000 of
its 700,000 customers are without power, and some could be off for a week. The
utility has also seen significant transmission damage, spokesman Brian Alford
says. "This is likely to be the worst storm in this company's history," he
says. OGE off 0.8% at $21.90. (JDK)
11:40 (Dow Jones) Interesting note from UBS Warburg, upgrading Accenture
(ACN) to strong buy from buy. The firm's research shows there could be as much
as $3.6B-$5.7B in revenue at risk for firms providing both consulting and
auditing services simultaneously to the same clients. The potential opportunity
to Accenture is between $100M-$1.4B. UBS also cites limited exposure to Enron
(ENRNQ), continued strong operating metrics, and valuation. Notes Andersen and
Accenture have been separate and independent legal entities for more than 10
years, and says ACN didn't perform any services related to audit of Enron or
the establishment of its partnerships. Shares up 3.7% at $25.88. (TG)
11:31 (Dow Jones) One little metric IPO analysts like to use to assess the
health of the new issues market is the founding date of the average company.
The more recent the vintage of the average IPO, the thinking goes, the more
speculative the investing is. Unfortunately, this metric won't be so reliable
this year. After the close, Carolina Group, which is the Lorillard tobacco
tracking stock of Loews Corp. (LTR), will price its IPO. It's founding date?:
1769. (RJH)
11:23 (Dow Jones) Japanese Government Bond market, with benchmark yield at
1.48% Thursday morning in NY, eyes S&P's directly worded statement that credit
quality in Japan expected to further deteriorate in 2002 in all sectors of
economy. Banking sector "weaker than ever before, and some form of government
intervention, especially for larger banks, appears to be inevitable." However,
S&P cites a few encouraging signs - structural adjustments in companies
expected to broaden and gather pace, says S&P MD for Asia Pacific region
Michael Petit - credit quality in corporate and banking sectors may take two
years to bottom out, however. (JNP)
11:15 (Dow Jones) With low of 98.04 this morning, June fed funds priced in at
least an 80% chance of a 25 basis point tightening by spring. That compares to
about a 60% chance priced in at Wednesday's close. (CMN)
11:10 (Dow Jones) Six Flags (PKS) says a purported class-action lawsuit
against it alleges that security and other practices at its park in Valencia,
Calif., discriminate against visitors on the basis of race, color, ethnicity,
national origin and/or physical appearance. The suit was filed on Nov. 27,
2001, and combines five previously filed complaints. The plaintiffs purport to
represent seven "subclasses" of visitors to the park and seek compensatory and
punitive damages in unspecified amounts, and injunctive and other relief. The
company has objected to the class allegations, arguing that the lawsuit cannot
appropriately be maintained as a class-action, and intends to vigorously defend
this case. Shares flat at $15.15. (DL)
11:00 (Dow Jones) Fired up about that surprising GDP reading Wednesday? Try
to contain your excitement. Bill Bruns, of Schaeffer's Investment, points out
the first-run number often looks much different than the final reading. In the
3Q, GDP first was reported as declining 0.4%, vs. expectations of a 1% drop.
The number got finalized at down 1.3%. Given everything facing stocks now,
including Tuesday's downside break of trading ranges on several major indexes,
caution is warranted. (TG)
10:49 (Dow Jones) You can't rule out accounting issues at individual
companies, says Salomon Smith Barney economist Steve Wieting, but panic selling
likely leaves U.S. markets more attractive, not less. Concerns about accounting
issues and earnings quality, in the aggregate, have little to do with
underlying business conditions. That said, the idea that earnings quality
issues are transitory is not a call suggesting that valuations are low. "We
expect little net recovery in earnings in 2002 on the same basis that earnings
were reported in 2001," he says. (TG)
10:38 (Dow Jones) The manufacturing outlook appears to be improving, says
Lehman Brothers. They're pegging the ISM index - due Friday - at 49, which is a
pace that's almost above water. (MSD)
10:27 (Dow Jones) Merrill Lynch (MER) continues to see no compelling reason
to merge with a commercial bank, its president and chief operating officer told
attendees at a Salomon Smith Barney financial services conference. It's a tune
Merrill has sung many a time, even as rumors crop up from time to time about a
possible linkup with joint venture partner HSBC Holdings (HBC). Both companies
have repeatedly denied such a merger would take place. "No one has yet made a
compelling case as to why [merging with a bank] is additive to our ability to
grow," O'Neal said. (CWM)
10:20 (Dow Jones) The Dow Jones-Bank of Tokyo-Mitsubishi business barometer
rose by 1.0% in the week ended Jan. 19, marking the third straight weekly
increase. "There is increasing evidence of a business cycle trough in
December," said Mike Niemira, senior economist at BTM. (JM)
10:13 (Dow Jones) Wall Street just got another big dose of economic data,
most of it pretty good - as long as you're in that wacky camp that believes a
stronger economy is a good thing. Chicago PMI up, deliveries higher,
help-wanted index gains. Stocks holding decent gains, with overall market
helped by Intel upgrade, good P&G numbers, and goodwill generated by
Wednesday's late rally. For all the big numbers out so far this week,
tomorrow's employment report steals the show. DJIA up 46 at 9809, Nasdaq adds
10 to 1922, and S&P 500 climbs 3 to 1117. (TG)
10:05 (Dow Jones) Shares of Research In Motion (RIMM) are up 7% early after
Goldman Sachs analyst Rajiv Das upgraded the stock to his recommended list. Das
had previously rated the stock market outperformer. The company, maker of the
BlackBerry e-mail device, is also benefiting from a favorable comparison
between BlackBerry and Palm's (PALM) latest competitive offering, the i705, by
Wall Street Journal technology product reviewer Walter Mossberg. "In my view,
the new Palm i705 is a weaker e-mail device than the RIM," Mossberg wrote in
his column Thursday. (SEW)
9:54 (Dow Jones) McLeodUSA's (MCLD) Chapter 11 petition listed consolidated
assets of $4.8 billion and debts of $4.57 billion. McLeodUSA's pre-packaged
bankruptcy filing comes just days after another telecom giant, Global Crossing
(GBLXQ), filed the fourth-largest Chapter 11 case in history. The filing also
comes just a week after telecom giant Winstar Communications (WCIEQ) converted
its Chapter 11 reorganization case to a Chapter 7 liquidation. Those holding or
controlling 5% or more of the voting shares are Wellington Management Co.,
Clark E. McLeod and Alliant Energy Investments Inc., according to the petition.
(DE)
(END) DOW JONES NEWS 01-31-02
12:34 PM |
