MARKET TALK: Orders Look Pretty Good All Around
06 Mar 10:08
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
(Call Us: 201 938-5299; All Times Eastern)
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10:08 (Dow Jones) Factory orders rose by 1.6% in January, reflecting a 2.0%
increase in durable good orders (revised from 2.6%) and a 1.1% increase in
orders for nondurable goods. Factory orders for December were revised down to a
0.7% increase from 1.2%. Transportation goods led the orders gain, up 4.1%,
while computer orders rose by 1.9%. Shipments rose by a solid 2.0% which will
actually show up in 1Q GDP. Meanwhile inventories fell by 0.6%. (JM)
9:58 (Dow Jones) Without any real surprises coming from ExxonMobil's (XOM)
meeting with analysts Tuesday, it might be time for some investors to take
money off the table, says Gerard Klauer Mattison's Michael Young. The analyst,
who downgraded ExxonMobil to neutral, said CEO Lee Raymond's comments on capex,
production and cost savings were either at or below market expectations. While
ExxonMobil "remains an outstanding company with a dominant position within the
industry", the stock is closing in on Young's 12-month price target of $45 a
share. Shares up 0.4% at $42.65. (CCC)
9:53 (Dow Jones) Alltel (AT) decided on Jan. 24 to exit its competitive local
exchange, or CLEC, operations in seven states representing less than 20% of its
CLEC access lines. The company determined during an evaluation of its CLEC
operations that a business model that relies on interconnection with other
carriers has limited potential for profitably acquiring market share. Alltel
said it will honor all existing customer contracts, licenses and other
obligations and work to minimize the inconvenience to affected customers during
the course of exiting those markets. The company believes the change will allow
the remaining CLEC operations to generate positive cash flows in 2002. (CC)
9:45 (Dow Jones) Agco's (AG) hada heck of a run, and it might not be over.
Morgan Stanley notes the shares are up 35% year-to-date, and 80% over the last
12 months on improving cash flow, hopes for improvement in the farm sector and
cost saving opportunities. Firm sees another 30% upside, with cost savings and
new distribution opportunities possibly pushing EPS to $3 by 2004. Price target
is $28. AG up 6.7% at $22. (TG)
9:35 (Dow Jones) State Farm's rising auto insurance losses could be a gain
for its publicly traded rivals, said Alice Schroeder, a Morgan Stanley
insurance analyst. The mutual insurer's net written premiums rose 16% in 2001,
reflecting higher rates and volume, Schroeder said. However, the company's
rising auto loss ratio contributed to a $5 billion after-tax loss, Schroeder
said. "We think the cost of increasing market share exceeded State Farm's
expectations, suggesting it may now start raising rates more aggressively," she
said. This could benefit Allstate (ALL) and Progressive (PGR) as they seek
higher rates, Schroeder said. (CUB)
9:26 (Dow Jones) Merrill Lynch would use the recent correction in Home Depot
(HD) stock as a buying opportunity. The firm says the stock is selling at a 5%
discount to buyback parity (which measures the price at which management can
buy back stock accretively if they borrowed in the debt market to repurchase
shares.) Since 1995, HD has never sold at a discount to buyback parity without
delivering a positive next-6-month return, with the average return being 15%.
(GS)
9:17 (Dow Jones) The Travelers Property Casualty IPO is on a fast track, with
underwriters moving the pricing up a week to March 21. Also, the company set
some more terms on the IPO, which will sell 210 million shares at $16 to $19.
Travelers now says it expects to have 1 billion shares outstanding, giving it a
market value of $17.5 billion after the IPO. Citigroup (C) holders will get
their shares by the end of the year. (RJH)
9:08 (Dow Jones) USD generally soft, JPY at itsbest levels of the day, could
go through resistance at Y131.70. EUR is $0.8736; USD/JPY is Y131.70; EUR/JPY
is Y115.09. (JRH)
9:01 (Dow Jones) Medtronic (MDT) got approval from an FDA panel for its
InSync ICD, but the 6-to-5 vote was less enthusiastic than US Bancorp Piper
Jaffray expected. The firm considers final approval likely, but new data
requirements may slow down the process by a quarter from Piper's previous
midsummer assumption. Cuts FY03 revenue and EPS view by $48M and 1c,
respectively, on expectation of slightly later InSync ICD start and slower
ramp. Keeps outperform rating. (TG)
8:53 (Dow Jones) Telecom service provider Genuity (GENU) is making the right
long-term decisions, but the stock lacks near-term catalysts, says Morgan
Stanley analyst Todd Scott, who initiated coverage with a neutral rating. "We
see slow projected growth as Genuity shifts its focus to enterprise; limited
profitability as the slow economy and long-haul overcapacity delay high-margin
incremental revenues," he says. Scott sees execution risk relative to guidance
and long-term funding risk. (JDB)
8:47 (Dow Jones) ABN-Amro visited with Sprint PCS (PCS) recently and came
away with increased confidence in the company's ability to deliver in 2002.
Believes PCS wants to hold the line on pricing, and Amro doesn't believe moves
by Cingular and Verizon Wireless will force a price reduction reaction. Keeps
buy rating. (TG)
8:40 (Dow Jones) First Albany doesn't see any new angle or information in
ISS's backing of the HP (HWP-Compaq (CPQ) merger that wasn't already revealed
by either side. The firm also says ISS's endorsement wasn't "particularly
glowing" and leaves the possibility that its clients could come to a different
conclusion. For example, ISS acknowledges that a spin-off of the Imaging &
Printing unit may be the best option in the short-term, which would make those
investors without a long-term perspective pause. However, First Albany thinks
the decision gives H-P management the edge in winning approval of the deal.
(GS)
8:33 (Dow Jones) Treasurys remain trapped in narrow trading ranges and are
mildly weaker across the curve. Fed's Santomero repeats recent "Fed speak" and
is not exerting much influence on market, which awaits factory orders later.
(MM)
8:30 (Dow Jones) A little more weakness is in store for stocks early. Tech
names are rarely far from the action, and they'll certainly be in the thick of
things Wednesday: Amazon (AMZN) is looking weaker after the resignation of its
CFO, while the parties interested in the Hewlett-Packard (HWP) and Compaq (CPQ)
deal will have a chance to react to that ISS call. Microsoft (MSFT) will be in
court starting today in an effort to resolve its issues with the government.
Refis are still going strong, factory orders should continue the streak of
robust economic data, while the release of the Fed's Beige Book always has the
chance to be a market mover. (TG)
(END) DOW JONES NEWS 03-06-02
10:08 AM |
