MARKET TALK: Gilead Pipeline Needs Some Work, UBS Says
06 Mar 12:56
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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MARKET TALK can be found using code N/DJMT
12:56 (Dow Jones) UBS Warburg analyst Geoffrey Harris lowers his rating of
Gilead Sciences (GILD) to hold from buy, citing valuation. Gilead trades at his
$74 12-month price target. While he is bullish about the biotechnology
company's fundamentals and HIV treatment Viread sales outlook for the year, he
thinks the pipeline is weaker than peers and hepatitis B virus treatment
adefovir, which has yet to be filed for approval, lacks blockbuster potential
that is seen with Viread. Shares flat at $72.95. (BMM)
12:45 (Dow Jones) In another sign that Wall Street analysts are becoming more
concerned about disclosing their firms' banking relationships, a report
supporting GSE derivative transactions sent out by Deutsche Bank contained, for
the first time, an upfront disclaimer, saying "Let me reiterate that Deutsche
Bank does a good amount of banking business with both Fannie (FNM) and Freddie
(FRE)." (TL)
12:33 (Dow Jones) Offering a small piece to the wireless consolidation puzzle
Tuesday was SBC Communications (SBC) Chairman and Chief Executive Ed Whitacre,
who reportedly listed AT&T Wireless (AWE) and Deutsche Telekom's (DT)
Voicestream as logical acquisition targets for Cingular, SBC's wireless venture
with BellSouth (BLS). He made the comments, which add credence to speculation
that has been swirling around Cingular for a while, at a Credit Suisse First
Boston conference in Orlando. (CBN)
12:17 (Dow Jones) No small changes. Bevis Longstreth, an SEC commissioner
from 1981 to 1984, tells the Senate Banking Committee what is needed to fix the
accounting industry: "My thesis is simple. The profession needs reform in two
major respects: 1) An effective rule preventing the delivery of non-audit
services to audit clients. 2) An effective system of self-regulation." (MHA)
12:04 (Dow Jones) A bit more sobering news from Kent Engelke, Anderson &
Strudwick's capital markets strategist. Points out that the economy grew by
8.3% in the December 1999 quarter, its greatest growth rate in over 12 years,
and a reason for the bullish crowd to rationalize the forward looking 24.3 P/E
on the S&P 500. Today, the 4Q growth rate of 1.4% is 83% lower than two years
ago, while the forward-looking multiple has only been reduced by 6.5%. What's
more, the Fed's 2002 consensus forecast of 2.5%-3% grow is only about half the
historical post-recession growth rate, and is 65% below that of 1999. "A bull
market tops out at a 25 multiple and a bear market ends around an 8 multiple,"
he says. "By definition a recession rids the extremes in both stock valuations
and the economy. It is evident that the excesses are still great in the equity
averages." (TG)
11:49 (Dow Jones) Merrill maintains stance that there's better than 50%
chance Hewlett-Packard (HWP)-Compaq (CPQ) deal gets done, and had assumed a
"yes" vote from ISS. "Since we like the deal, we believe ISS decided
correctly," Merrill says. By Merrill's count, about 20% of the votes have come
out against and now 5.5% (with Barclays) are for. Assuming retail holders are
split, H-P needs 65% of the institutional vote. Assuming 8% held by index funds
vote in favor, H-P needs 58% of remaining institutional vote. Merrill says
proponents like deal for complementary strengths, while one detractor said,
"It's like tying two rocks together and seeing if the will float." (TG)
11:36 (Dow Jones) The week's rally in Nymex petroleum complex has stalled due
to the bearish indications of a crude oil inventory build, high Russian crude
and product exports (according to IEA), but prices manage to hold support at
$22.80/bbl. "If it doesn't break down (below $22.60), fund buying is likely to
come in again this afternoon as shorts cover margin calls," broker says. April
crude -22c to$22.95/bbl. (MSX)
11:27 (Dow Jones) With their recent run-up, many stocks are now approaching
their upper resistance levels. As they enter a testing phase, the Seidman/Skupp
options team at Miller Tabak & Co. has come up with a list of some 34 stocks
that are trading near their 52-week highs but whose defensive put options
nonetheless are still reasonably-priced - an idea for investors who might be
looking for some downside protection. The list includes names like Aetna (AET),
Black & Decker (BDK), Caterpillar (CAT), Fedex (FDX), General Motors (GM),
General Dynamics (GD), International Paper (IP), KLA-Tencor Corp. (KLAC),
Minnesota Mining and Manufacturing (MMM), Nike (NKE) and Whirlpool Corp. (WHR).
(KT)
11:16 (Dow Jones) Williams Cos.' (WMB) successful restructuring of the $1.4
billion Williams Communications (WCG) Note Trust is a positive move, but the
company still has issues. The higher interest expense from added debt will eat
into the company's earnings, said J.P. Morgan's Anatol Feygin. He cut his 2002
and 2003 earnings estimates to $2.00 and $2.20 a share, respectively. The
reduction puts Feygin's estimates sharply below the Wall Street consensus
estimates published by Thomson Financial/First Call. Other analysts may be
waiting until after Williams' analyst meeting in New York Friday to revise
their numbers. Also noteworthy, Feygin estimates Williams' debt-to-capital
ratio has bounced up to 68%. The higher leverage puts Williams in a precarious
position because a lower credit rating would likely hurt its marketing and
trading business. (CCC)
11:09 (Dow Jones) Fed chairman Alan Greenspan was born on March 6, 1926,
making today his 76th birthday. (JM)
10:56 (Dow Jones) It wasn't everything we asked for but we'll take it. That's
pretty much steel producers' reaction to Bush administration tariff ruling
yesterday, and Nucor (NUE) repeated that line on its conference call earlier
Wednesday. CEO Daniel DiMicco called the Bush tariffs a "strong, solid remedy."
As for Nucor's bid for some Birmingham Steel (BIR) assets, DiMicco was pretty
mum, saying only: "Our offer is there for Birmingham people to digest." (CCW)
(END) DOW JONES NEWS 03-06-02
12:56 PM |
