MARKET TALK: Lowe's Sees Improvement On Its Home Front
04 Feb 11:40
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
11:39 (Dow Jones) Some on Wall Street are boosting 2002 earnings estimates
for Lowe's (LOW) after the home-improvement retailer said 2001 ended up better
than expected, thanks to warm weather. Prudential's Wayne Hood raised his 2002
EPS view 3 cents to $1.50, while Parket/Hunter Inc.'s Steven Baumgarten boosted
his estimate 4 cents to $1.54 and raised his price target by $3 to $55. Hood
said sales momentum for both Lowe's and Home Depot (HD) could carry into the
spring, and inventories should be lean after both cleared slow-moving goods in
the 4Q. LOW up 2.3% at $46.77. (MEL)
11:29 (Dow Jones) Familiar theme from Merrill's chief quant, Rich Bernstein:
investors continue to appear unusually confident about effectiveness of
monetary and fiscal policy, and equity valuations remain extreme. If business
does pick up, then a flood of stock issuance might put a ceiling on the market.
Keeps allocation at 50% stocks, 30% bonds, and 20% cash. (TG)
11:20 (Dow Jones) Hewlett-Packard (HWP) has assigned "more than 450
professionals" to work out integration issues before the close of its merger
with Compaq Computer (CPQ). "We do agree that successful integration is
critical," Hewlett-Packard said. "That is why H-P and Compaq have a team of
more than 450 professionals dedicated to overseeing thorough pre-close
integration plans." In its set of written talking points created for the
company's communications staff, H-P emphasized the effort being expended in the
creation and execution of its plan to integrate with Compaq. "That plan was
developed based on a careful analysis of the successes and failures of prior
mergers," the company said, "and implementation of the integration effort is
already ahead of schedule." (TC)
11:10 (Dow Jones) Yield margins in the high-grade market have moved out three
to five basis points this morning, coming under pressure from sector specific
widening. Tyco (TYC), WorldCom (WCOM) and Williams (WMB) bonds have all been
quoted wider on negative news, which has pushed the rest of the market out with
it. (RAB)
11:01 (Dow Jones) Major averages are finding it difficult to get out from
under investor concern not only about corporate trust, but other business
issues as well. Financials are generally weak again, and techs overall soft
despite encouraging comments out of H-P. Big industrials worst performers,
wireless, brokers and pipelines also soft. Gold, drug retailers and heavy
machinery (we thought the latter two didn't go well together) are on top. DJIA
down 80 at 9826, Nasdaq Comp falls 33 to 1878, and S&P 500 drops 14 to 1108.
(TG)
10:50 (Dow Jones) Tyco (TYC) bonds got hit hard this morning, their 10-year
paper moving out as wide as 500 BP. Currently, the yield margin is trading
around 425 BP. Tyco started out last week around 165 BP. WorldCom (WCOM) also
saw their 10-year paper move out around 40 BP to 330 BP. TYC shares off 12%,
WCOM drops 10.6%. (RAB)
10:44 (Dow Jones) A shareholder group wants to dismiss Global Crossing's
(GBLXQ) Chapter 11 bankruptcy case and put forward an alternative financing
proposal, stating that the bankruptcy filing wasn't necessary. Through a
warrant offering, the company would be able to raise $1 billion now, and up to
another $2 billion if the warrants are exercised. David Mersereau, an associate
vice president of a small Hartford, Conn.-based investment firm, is leading a
small shareholder group's efforts to raise funds for the company under a
warrant offering - rather than through the bankruptcy proceeding and proposed
equity sale. Mersereau said his firm holds about 500,000 to 600,000 shares on
behalf of clients. The shareholder group is currently trying to retain counsel
in New York to assist it in its efforts to have the bankruptcy case dismissed.
(CM)
10:37 (Dow Jones) Lower capital spending by large phone companies has hurt
optical systems maker Ciena's (CIEN) chances of getting early product wins at
those carriers, ABN-Amro analyst Ken Leon said. That, coupled with weaker
results and outlooks from its competitors, caused Leon to cut his rating on
Ciena to hold from add. "Absent profitability in fiscal year 2002, we believe
management will have to capitulate and take necessary cost-cutting to achieve
breakeven," he said. Shares off 6% at $11.28. (JDB)
10:26 (Dow Jones) Despite continued pressure on corporate technology
spending, research firm Gartner Dataquest predicted the security software
market will grow 18% to $4.3 billion this year, spurred on by increased
security worries after Sept. 11. Defensive technologies, like antivirus
software, intrusion detection systems and firewalls, will receive particular
interest from corporations concerned about cyberattack. (RTR)
10:18 (Dow Jones) Is the time at hand for a turnaround at Interpublic Group
of Cos. (IPG)? Morgan Stanley analyst Michael Russell seems to think so. He
reiterates a "strong buy" rating on the stock (the company has struggled with
the current ad recession as well as the loss of certain key accounts in 2001)
and suggests cost savings and an ad rebound could give the shares more
momentum. Shares off 2.4% at $28.65. (BS)
10:11 (Dow Jones) Target support for the Dow Industrials is 9836.25, and the
average's intraday low is 9832.69. Target support for the Nasdaq Composite is
1892.88, and Naz's intraday low is 1892.26. Both indexes are firming. (SC)
10:09 (Dow Jones) Nextel Communications' (NXTL) NII Holdings unit failed to
make a $41 million interest payment on its 12.75% senior redeemable notes due
2010. The interest payment on the notes, with $650 million principal amount
outstanding, was due Friday. NII Holdings also said it doesn't plan to make
further principal or interest payments on a $382 million vendorfinancing loan
with Motorola Credit (MOT) or a $108 million Argentine bank credit line.
Forbearance agreements related to earlier defaults on the loans expired Jan. 22
and haven't been extended, so the lenders can pursue other means to collect the
funds. Shares off 6% at $7.40. (CS)
10:05 (Dow Jones) Chicago Fed's CFNAI showed some improvement in December
relative to November, with the monthly indicator rising to -0.77 from a revised
-1.29 in November. The three-month average was up to -1.05 from -1.44.
Nevertheless, the Chicago Fed said December's reading was continuing evidence
of below-trend growth and that "the U.S. economy was in recession." (MEM)
9:59 (Dow Jones) Typically great thoughts from Lehman's Jeff deGraff. First,
the difference between a downtrend and a trading range is the response to
oversold conditions. In trading range, the lack of trend benefits buying
weakness and selling strength. In a trend, it's pressing bets in direction of
the trend that pays off. The Sept.-January rally did not change the underlying
trend. "Therefore, if we have entered into a trading range, oversold conditions
should find support, " he says. "If such conditions fail to provide demand, the
downtrend should be considered the dominant force." He also adds that the Enron
fallout and the environment it's creating is the breading ground for confidence
degradation. Real bottoms often result as disdain for stocks emerges, and this
could have that potential. Finally, about a year ago he pointed out that by the
end of most big boom/bust cycles, someone usually goes to jail for the sins of
their greed. "This cycle appears no different." (TG)
(END) DOW JONES NEWS 02-04-02
11:40 AM |
