MARKET TALK: Kohl's Growth Will Be Tough To Boost
05 Mar 15:25
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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3:25 (Dow Jones) Robertson Stephens thinks it will be very difficult for
Kohl's (KSS) to surpass its 19-25% earnings growth rate in its FY02 earnings
report, coming after the bell, because of the company's investment in its first
noncontiguous market expansion (Southern California). "We believe that Kohl's
premium valuation depends on earnings upside, and thus the trading multiple
will likely be under pressure." The firm maintains its buy rating and $76 price
target because the company "is one of the few growth vehicles left in the
department store industry and posts industry-leading comps." (GS)
3:10 (Dow Jones) "Microsoft should get more credit for the quality and
conservatism of its accounting," says UBS Warburg analyst Don Young.
Specifically, Young praises MSFT's mix shift in volume licensing programs to
enterprise agreements, which "is nearly analogous to a shift from 'purchase' to
'lease' accounting." This transition, he says, enhances the visibility of
MSFT's outlook and the stability of its revenue and earnings stream. "Rather
than revenues being driven by PC shipments - PC software revenues will be
driven more by changes in the installed base of PCs." The firm reiterates its
strong buy and has a $105 price target on the stock. MSFT off 35c at $62.97.
(GS)
2:59 (Dow Jones) Shares of Scientific-Atlanta (SFA) down nearly 8% after
fellow set-top box manufacturer, UK-based Pace Micro Technologies, issued a
profit warning Monday. Pace cut its year-end revenue projection by 30%.
However, the UK company cited its decision to avoid the risk of shipping to
troubled European cable companies like NTL (NLI) and Telewest Communications
(TWSTY), while Scientific-Atlanta's largest customers are more established,
with more liquidity. (CBN)
2:50 (Dow Jones) "We're in for much bigger deficits than the CBO is
predicting," says Dean Baker of the Center for Economic and Policy Research,
who questions CBO's projections for capital gains revenue in a letter to CBO
Director Dan Crippen. Baker suggests CBO is underestimating projected deficit
by as much as $500 billion over next 10 years. (JCC)
2:40 (Dow Jones) No, it's not a typo. Overstock.com, an online retailer
specializing in company overstocks, has filed to raise $36.8 million in an IPO.
Dot-com IPOs have been rare. Strike that - they've been almost nonexistent
since early 2000. There was one Web offering recently, for PayPal (PYPL), but
mostly investors have preferred more old economy IPOs. Overstock, incidentally,
will be a W.R. Hambrecht OpenIPO, where retail investors can bid on the stock
in an online auction. The last OpenIPO was breakfast and lunch company Briazz
(BRZZ), which ended 2001 as the second-worst performing IPO of the year, down
more than 80%. (RJH)
2:36 (Dow Jones) If you think the recent economic data suggest good times
ahead for industrial giants like Dow component United Tech (UTX), A.G. Edwards
says you're late to the party. "We are encouraged by the stronger signs of an
industrial recovery, yet a further increase in price objective, to the upper
half of the historical P/E range applied to the 2003 estimate, would presume a
nearly perfect pace of rebound. It seems more prudent to change the rating to
hold rather than to raise the price objective." UTX shares losing $3.60 to
$73.65. (GS)
2:22 (Dow Jones) Is AT&T (T) preparing to buy out AT&T Canada's (ATTC)
shareholders before the June 2003 deadline. It certainly looks that way. BMO
Nesbitt analyst Peter Rhamey says AT&T management indicated Monday they have an
incentive to take such action. By completing the transaction early, AT&T would
reduce the final price it pays. AT&T also would be able to use its stock to
finance the deal if done ahead of completing its transaction with Comcast
(CMCSA), Rhamey said. In possible support of this view, the AT&T/Comcast
agreement allows AT&T to issue up to 275 million shares in connection with
certain, unspecified transactions, which some observers believe include buying
out AT&T Canada's shareholders sooner rather than later. (BED)
2:06 (Dow Jones) The equity index with the fewest problems of overhead
resistance is the S&P Small Cap Index, mostly because it hit an all-time high
on Monday. Hilliard Lyons technician Dick Dickson points out that small-cap
names typically enjoy cyclical periods of about 4-6 years when they
consistently outperform their larger peers. "The current cycle appears to date
from early 2000, which should mean small caps outperform for another 2 years at
least," he says. (TG)
1:55 (Dow Jones) London and Tokyo continue to top the list as the two most
expensive cities in the world for renting Class A office space, although costs
have ticked down slightly from last year, according to a new Grubb & Ellis
study. The report, which surveyed some 60 cities worldwide, shows rental costs
slipped 1.7% in London to $149.04 a square foot in the 4Q from the same period
a year earlier. In Tokyo, costs fell 4.3% to $107.20 a foot. Only one American
city - New York - made the top 10. Its rental costs averaged $59.16 a foot,
down 8.3% from a year ago. San Jose - ranked third a year ago - tumbled to 12th
place with rental costs of $45.31 a foot, and San Francisco - previously fourth
- wound up 16th this time around with costs of $37.71 a foot. (JKM)
1:43 (Dow Jones) Global Crossing (GBLXQ) filed suit against XO Communications
(XOXO) to prevent XO from terminating their Jan. 3, 2001, service agreement
under which XO provided dedicated access services to Global Crossing and its
subsidiaries. Dedicated access lines are specialized high quality
telecommunications channels that allow Global Crossing customers to directly
connect to the company for long-distance telephone services. XO's termination
of the agreement "threatens to impede Global Crossing's ability to service its
clients," thereby jeopardizing its reorganization process, Global Crossing
said. (SG)
1:36 (Dow Jones) Credit Suisse First Boston says spreads have widened to the
point that some of the least-favored sectors now look attractive, notably
consumer finance and gas pipelines. Remains cautious about telecoms, preferring
to own the sector in the short end of the maturity spectrum. (MCG)
1:27 (Dow Jones) The FDA has warned Biomet (BMET) unit Biomet Merck because
of concerns about sterility of its implantable orthopedic devices made at its
Bridgend, South Wales, plant. The warning letter said an FDA inspector in 2001
found the plant's sterilization process didn't meet FDA standards and workers
didn't investigate further when quality control audits showed sterility
problems. The agency said it may detain Biomet Merck's implantable orthopedic
devices upon entry to the U.S. A Biomet spokeswomen told Dow Jones Newswires
Tuesday that the company takes the warning seriously and is trying to get more
details on the situation, but added the financial impact to the company would
be negligible. The Bridgend plant makes shoulder implants and a few other minor
products, and the company isn't aware of any imports being blocked by the FDA.
BMET off 6% at $29.23. (CS)
1:16 (Dow Jones) A new survey from TowersGroup, a New York PR and reputation
management firm, says 43% of active, individual investors have less confidence
in the stock market in aftermath of Enron (ENRNQ). Just 23% of U.S. investors
believe strongly in the stock market's ability to reflect the fair value of
stocks. And a whopping 88% of investors believe Enron execs, board, auditors,
and attorneys "intentionally" misled the public. (TG)
1:04 (Dow Jones) Lehman says initial claims probably remained at the 375,000
level in the week of March 2. An upward revision to GDP growth in 4Q points to
stronger productivity growth than the BLS initially assumed. Expects BLS will
revise 4Q productivity to 5.0%, from 3.5% qtr-over-qtr. On year-over-year
basis, productivity will have risen 2.0% in 2001, remarkably strong growth for
a recession. Also expects consumer installment borrowing to remain unchanged in
January. Data out Thursday. (MCG)
12:55 (Dow Jones) Internet security companies' stocks are poised for a bounce
back, says J.P. Morgan's Sterling Auty. The analyst says his IT security index
is down 30% for the year, compared to only 7.6% for the Nasdaq. The index tends
to trade in fairly high correlation to the Nasdaq, though a high beta means it
does underperform in bad times. Still, it has only lagged to this degree one
other time in five years, likely due to "unfounded concerns over insider
selling and investor nervousness regarding accounting concerns." The group's
businesses are strong relative to other tech companies and should benefit from
an improving economic outlook, he argues. His top picks in the group are Check
Point Software (CHKP), NetScreen (NSCN) and Network Associates (NET). (RR)
12:38 (Dow Jones) Cycle of Fed easing, barring another terrorist attack, is
over, says Bill Hornbarger, chief fixed-income strategist, A. G. Edwards. With
recent encouraging data, looks to Fed to change to a neutral bias at one of the
next two meetings. Friendly inflation outlook coupled with neutral to tighter
Fed will lead to continuing flattening of the yield curve, he adds. Looks for
Fed to take back one or two of its rate cuts by midyear, and for 10-year yields
to drift higher with a "target" near 5.50%. (MCG)
(END) DOW JONES NEWS 03-05-02
03:25 PM |
