Close Dow +118.80 at 9744.24, S&P +16.05 at 1096.22, Nasdaq +36.77 at 1818.88: The major averages finished solidly higher on Friday. Buy interest in technology came behind several analyst upgrades, not the least of which was a Merrill Lynch upgrade of Sun Microsystems (SUNW +5.7%) to long-term Buy from Neutral. The firm cited strategic shifts in SUNW's business including the endorsement of Linux and a de-emphasis of Solaris in favor of infrastructure software Sun ONE and N1. It is also worth noting however, that Merrill Lynch maintains its near-term Neutral rating on SUNW...
Separately, there were also a few upgrades in the semiconductor sector worth considering. The first was a UBS Warburg upgrade of Texas Instruments (TXN +2.6%) to Buy from Hold on the basis of increased margin assumptions. The firm sees higher operating margins and earnings than previously expected saying it had underestimated management's determination to control operating expenses. While UBS Warburg sees downside in the stock to $25, it also sees upside of 25% to its new price target of $37. In a similar move, UBS Warburg also upgraded National Semiconductor (NSM +3.3%) to Buy from Hold and increased its 2002-2003 estimates. After a recent company visit, the firm believes NSM will benefit from incremental business in displays and wireless handsets. As a consequence, it sees 30% potential upside in the shares to its $33 price target...
3:48PM TriQuint Semi (TQNT) 10.35 +0.60: -- Before Open -- TQNT reported a profit of $0.01 vs. consensus est. of a loss of $0.02 and guided Q1 revenues to $60-65 mln with EPS in the range of breakeven to a slight loss per share last night; analysts are turning more positive on the stock. Wachovia Sec reiterates their Buy rating on TQNT for "patient investors", firm believes TQNT is a lower-risk, lower-reward investment due to the company's business diversity and expects TQNT to start showing positive comparisons in Q4 2002. USB Piper Jaffray upgrades the stock to MKT PERFORM from Underperform; firm sees limited downside risk at these levels and believes Q1 represents the trough qtr for sales.
3:23PM ABN on Semi Equip : -- Before Open -- ABN AMRO initiates coverage of the group with 5 names: KLAC with a Buy rating, AMAT with an Add rating, and LRCX, NVLS, and TER with Hold ratings. Despite the firm's expectation of capex to be down 31% y/y in 2002, ABN believes there is sufficient data that indicates that the end market for semi cap equip has stabilized and is on track for a slow recovery in 2002; firm expects Q1 orders for a majority of semi equip companies to be up seq. in the 5-10% range. ABN puts their top pick (KLAC) and overall industry leader (AMAT) as best positioned to benefit from the 3 industry transitions: IC fabrication with 0.13-micron feature sizes, copper interconnect-related technologies, and 300 mm wafers.
2:59PM Veeco Instruments (VECO) 27.36 -2.74: -- Intraday -- VECO warned for Q1 and guided revenues down to $70-75 mln for EPS of ($0.04-$0.07); much lower than the consensus est. of a profit of $0.09. Thomas Weisel maintains their Buy rating and views current weakness in the stock as an excellent buying opportunity (largely on mgmt comments that it expects that bookings will trough in Q3 and that seq. improvements will continue for the remainder of 2002. Firm believes AFM acceleration from higher fab utilizations at 0.13 micron will drive VECO business; rates shares as inexpensive, trading at a premium to peer group.
1:58PM QLogic Intraday -- Technical -- (QLGC) 43.65 -0.70: Recently spiked below its 200 day simple ma at 43.99 but the bottom of its multi-month trading range (42.76) has held firm with prices now on the mend. Sustained action back above the average and chart congestion near 44.15 is needed to neutralize the recent bearish bias. Failure exposes 41.85 (38% retrace of Sep/Jan rally).
12:16AM Intel testing range floor -- Technical -- (INTC) 31.52 -0.79: -- Update -- Intraday slide has brought the issue to the bottom of its two month trading range and its 200 day exp ma (31.41/31.35). A breach would open the door to the 38% retrace of the Sep/Jan rally at 30 with chart congestion at 29.50.
11:08AM Kopin (KOPN) 9.03 +0.26: -- Before Open -- Needham & Co initiates coverage with a Buy rating and price target of $13. Firm believes Kopin has a leadership position as a supplier of advanced semiconductor transistors and miniature flat panel displays for wireless communications and high-resolution portable consumer electronic markets. Believe that wireless communications and high-resolution portable communications electronic markets represent high double-digit revenue growth opportunities for Kopin; notes Kopin's management is focused on improving their gross margins; believes they have several significant opportunities to implement this.
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