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Updated: 03-Oct-02 10:19 ET Comprehensive coverage on Short Stories, analysis on Story Stocks
Today's In Play Set default to no-refresh
10:19 ET KSS Kohl's: Solly cuts Sept same store sales forecast (57.91 -1.66)
Salomon Smith Barney lowers their Sept same-store sales est for KSS to 2-4% from prior est of 5-6%; firm cites a generally more conservative stance, co's susceptibility to apparel weakness, JCP's below-plan comps, and no impetus for apparel shopping given warm weather. KSS reports Sept same store sales on Oct 10.
10:15 ET Sector Watch: Biotech
Solid advance off the open (BTK at 330 +3.1%) with GENZ (+13.2%) leading the way (problems at competitor TKTX). Others posting gains this morning include: MLNM +4.9%, PDLI +5.1%, HGSI +5.5%, and CHIR +3.3%. Next levels of interest for the BTK are at 332, followed by 337/339
10:13 ET Dow adds more than 100 pts after ISM/Factory Orders report
10:04 ET ISM, Orders slightly better than expected
The ISM services index rose to 53.9% in Sep from 50.9% in August - this was better than the 51.4% consensus, though this release has a short track record and the implications of this small increase are difficult to determine. Factory Orders were a bit better than expected as well, remaining unchanged in August vs a consensus of -0.3%, though this was not a significant upside surprise for this report. The market has moved on the ISM services number - there has been a tendency to overreact to this report in both directions in recent months.
10:02 ET ISM Services 53.9% vs 51.4% consensus; Factory Orders flat vs -0.3% consensus
09:55 ET Sector Watch: Semiconductor
The semi sector is one of the worst performers (SOX -3.8%) this morning with AMD (-22.1%) pacing the way in the wake of the warning. Sizeable retreat also seen in BRCM -7%, LSCC -7.3%, LSI -4.3%, TER -3.7%, NVLS -3.9%, MXIM -4% and KLAC -3.5%. The index is slipping back toward support in the 239/238 area with a secondary floor near 234. Little thereafter in front of the Sep low at 231.59. Resistances are at 244 and 248.
09:55 ET CRAI Charles River Assoc CFO resigns (16.30 +0.05)
09:51 ET KCIN KPMG Consulting begins trading today under new name/ticker ()
The former KPMG Consulting begins trading today on the NYSE after announcing a name change yesterday to BearingPoint. Co's new ticker symbol is 'BE'.
09:46 ET Banks gap lower again following BK -13.8% warning:
NTRS -7%, PNC -4.8%, ZION -4%, USB -4%, FBF -4%, SOTR -2.5%, STT -2.3%, BAC -1.2%.
09:42 ET Corporate Bond Market
Our bond team is telling us that with most major bank Q3 earnings scheduled for release the week of October 14, corporate bond market participants are wondering who will disappoint. Some names that have circulated are: JPM, C (Salomon), FBF (Latin America), BAC (telecom & capital mkts business) and CMA (announcement yesterday).
09:40 ET Sector Watch
The early bias for the market is mixed with trade relatively limited thus far. Groups on the rise include: chemical, networking, computer-hardware, biotech, Internet security, video game, wireless, health and gold. Weakness noted in semi (SOX -2.3%), banking, broker/dealer, airline and storage.
09:28 ET S&P 500 -- Technical --
Flat open currently projected for the index. Takes a push through short term resistance at 831/833 and 837 to neutralize the recent weaker bias. Failure initially exposes supports at 822 and 819/817.
09:26 ET Morgan Stanley upgrades select transports
Morgan Stanley upgrades SWFT to OVERWEIGHT from Equal-Weight and BNI and KSU to EQUAL-WEIGHT from Underweight due to valuation; for SWFT, firm views the West Coast issue as a non-event, given that it is unlikely to effect the co's long-term earnings power.
09:26 ET PPE Park Place cuts Q3 outlook (8.14)
Reduces Q3 guidance to a range of $0.12-$0.14 from previous outlook of $0.17-$0.19 (Multex consensus $0.19). PPE attributes the change in guidance principally to results at Caesars Palace in Las Vegas. Caesars results were impacted by an abnormally low table hold percentage and continuing construction disruption.
09:24 ET Nasdaq Composite -- Technical --
Tech dominated index poised for a weaker start. Initial supports are at 1175 and 1169. Failure to work back through resistances at 1195/1197 and 1205 thereafter leaves the door open for a retest/breach of 1160 (Monday/Tuesday lows).
09:20 ET Gapping Up/Down
Gapping up: ADTN +11% (raises guidance), SNIC +10% (inks Sony deal), EMMS +9.4% (tops consensus), GENZ +7% (benefiting from problems at competitor TKTX), HOLX +6.7% (receives FDA approval for mammography system)... Gapping down: TKTX -57% (cuts estimates, reveals FDA concerns), VRTS -15% (CFO resigns after misstating MBA), BRCM -5% (cut to underperform at Solly)... Lower on warnings are MCRL -28%, AMD -19%, JKHY -18.5%, WTSLA -14%, BK -7%.
09:17 ET S&P futures vs fair value: -0.4. Nasdaq futures vs fair value: -3.0.
Not much conviction in the futures market, which is signalling a mixed to slightly weaker start for the equity market... TKTX will be a stock to watch as it is down 58% in pre-market action after the company lowered its 2002 sales outlook and said a decision on the approval of its Replagal therapy will likely be delayed into 1H03
09:15 ET ISM Services seen at 51.4%; Factory Orders -0.3%
Two more reports at 10 ET: the ISM services index is expected to edge slightly higher to 51.4% in Sep from 50.9%. This report is not nearly as critical as the ISM manufacturing index; the services report has little track record and thus no clear predictive power. Factory Orders are expected to fall 0.3% in August due to the already reported 0.6% decline in durable orders. This follows a very strong 4.4% gain in July.
09:12 ET PCS Sprint PCS: decision not to recapitalize should benefit shares - Bernstein (2.20)
Bernstein believes that Sprint's statement yesterday that the co has no intention of recapitalizing the PCS tracking stock should remove a negative overhang on PCS shares; maintains Outperform rating on PCS because of the long-term potential upside in the stock and because exceptionally low expectations and sentiment are likely to be exceeded intermediate term.
09:10 ET COO Cooper Cos and Wesley Jessen settle contact lense suit (53.51)
09:07 ET SNPS Synopsys reaffirms guidance, sees 10-20% semi growth in 2003 (34.60)
We are hearing from a source at SNPS's analyst meeting that the co reaffirmed guidance and expects semi growth in 2003 will be 10-20%; SNPS says its forecasts are predicated on R&D spending, which is not going down even in the current semi environment, and maintains that the growing complexity of chip design is a big positive for the co.
08:57 ET CSCO Cisco Systems upgraded at CEUT (10.05) -- Update --
CE Unterberg Towbin upgrades to BUY from Mkt Perform due to valuation and dissipating concerns of a sharp revenue shortfall for the current qtr; moreover, in contrast to Soundview's checks (8:37), firm says their analysis and checks indicate that firm's rev est of $4.805 bln and consensus EPS est of $0.13 remain achievable; price target is $13.
08:57 ET TKTX Transkaryotic cut to Outperform at SG Cowen (33.25) -- Update --
SG Cowen downgrades to OUTPERFORM from Strong Buy after co announced a Q3 Replagal revenue shortfall and FDA concerns about pain endpoint data from Replagal's pivotal trial. Firm cutting its 2002-06 ex-U.S. Replagal estimates by nearly 50%.
08:55 ET S&P futures vs fair value: +2.3. Nasdaq futures vs fair value: -1.5.
Recent improvement in the futures market has the cash market in position to start the session on a relatively mixed note... Positive earnings guidance from DD, reports that yesterday's late slide was driven by a "clerical error," and some relief that the jobless claims data weren't much weaker than expected have acted as supportive factors
08:46 ET Goldman Sachs more positive now on RBOCs
Goldman Sachs is now more positive on the regional bells given lower valuations and the likelihood of some better news over the next 6 months; raises sector weighting to Mkt Weight and favors BLS, SBC, VZ, and CTL.
08:43 ET STI SunTrust Banks cut to Hold at UBS (59.91)
UBS Warburg downgrades to HOLD from Buy on view that estimates, and expectations as to earnings quality, are too optimistic. Firm reduces FY02 est to $4.79 (from $4.86) and FY03 to $5.15 (from $5.30) to reflect 1) weaker than anticipated aggregate loan volume, 2) ongoing margin compression, 3) soft trust and investment mgmt revs.
08:38 ET S&P futures vs fair value: -0.6. Nasdaq futures vs fair value: -3.0.
Jobless claims for the week of Sep. 28 rose 5K to 417K (consensus 410K)... Reaction in futures market to the data was fairly muted, however, sentiment has improved somewhat with DD issuing a positive Q3 earnings pre-announcement... Enthusiasm held in check, though, as DD attributed the majority of improved EPS outlook to lower than anticipated provision for income taxes
08:37 ET BRCM Broadcom cut to Underperform from In-line at Solly; target $10 (11.55)
08:37 ET CSCO Cisco Systems estimates cut at Soundview (10.05)
Soundview says that channel checks indicate softer Oct qtr trends and that signs of a 2H02 networking recovery remain limited; as such, firm believes improved IT spending patterns could now slip into mid−2003; cuts FY03 rev/EPS ests to $19.4 bln/$0.54 from $20.3 bln/$0.59 and FY04 to $20.6 bln/$0.60 from $22.3 bln/$0.70 (both below consensus).
08:31 ET DD DuPont guides above consensus; upside driven by lower taxes (37.31)
Dow component raises Q3 outlook to a range of $0.35-$0.37 (excluding items), exceeding co's earlier est of approx. $0.24 (Multex consensus $0.29). The majority of the upside reflects expectation that Q3 provision for income taxes will be lower than previously anticipated.
08:31 ET Jobless Claims higher than expected
Claims rose 5K to 417K in the Sep 28 week, a bit above the 410K consensus. Continuing claims rose 29K in the prior week, indicating that new hiring remains weak. The September claims trend suggests a very definite risk that tomorrow's payrolls number shows a decline, which would be consistent with the modest pace of recovery seen this year.
08:30 ET Jobless Claims +5K to 417K vs 410K consensus
08:28 ET ACDO Accredo Health should benefit from Transkaryotic announcement (45.35)
Banc of America believes that TKTX's announcement that the FDA has essentially rejected data for Replagal's primary endpoint, pain reduction (see yesterday's 4:08 comment) is a positive for ACDO; it appears that GENZ's rival drug Fabrazyme is ahead of the game in terms of FDA approval (committee is scheduled to convene again on Dec 5-6), and ACDO will be a distributor of the drug.
08:20 ET S&P futures vs fair value: -3.1. Nasdaq futures vs fair value: -5.5.
Little change in futures market, which continues to signal a modestly weaker start for the cash market... Initial Claims data for the Sep. 28 week due at 08:30 ET... Consensus estimate is for a slight increase to 410K from the prior week's reading of 406K
08:17 ET AMZN Amazon.com could see negative impact in Q4 from dockworker strike - Solly (17.01)
Salomon Smith Barney believes that AMZN could face as much as a $0.05 negative EPS impact for Q4 if the labor situation at West Coast port is unresolved and the ports remain closed through year end; while some retailers have stockpiled inventory to cushion the impact, firm feels that AMZN's low-inventory model may complicate contingency planning.
08:16 ET Jobless Claims seen at 410K
Jobless Claims will be released at 8:30 ET; the market expects a slight uptick to 410K in the Sep 28 week from 406K in the prior week, keeping claims in the range that has persisted for several weeks.
08:09 ET CSFB cuts estimates and targets for IBM, EMC, and Sun
CSFB cuts FY03 ests and price targets for IBM, EMC, and SUNW due to sluggish spending patterns throughout the tech industry.
08:04 ET INTC Intel estimates may have to come down - Lehman (14.30)
Following last night's AMD warning, Dan Niles at Lehman expects INTC consensus ests for 2002-03 to come down by $0.02-$0.04 and $0.05-$0.08, respectively (consensus for 2002 is $0.53 and 2003 is $0.77); believes that although Sept was "not great," INTC should come within the lower half of their $6.3-$6.7 bln rev guidance, EPS should be closer to firm's $0.12 than the consensus of $0.13, and the Q4 consensus rev growth est of 7% will come down to firm's 5% est.
08:04 ET VRTS Veritas Software CFO resigns after misstating credentials (14.50)
The company said that it had recently become aware that Lonchar had misstated his educational credentials, including incorrectly claiming to have received an MBA from Stanford University. "While Ken's misstatement about his academic credentials is unfortunate, it has no bearing on the accuracy of our financial results or the quality of our financial procedures and controls," stated CEO Gary Bloom. The company also reaffirmed Q3 outlook for the second time in a little over a week.
08:01 ET S&P futures vs fair value: -2.0. Nasdaq futures vs fair value: -4.0.
Equity market poised for a modestly weaker open... Negative disposition follows on the heels of a generally weak performance by foreign markets, bothersome earnings warnings from the likes of BK and AMD, and a lack of otherwise bullish news
07:52 ET UST and RJR cut to Neutral by Merrill
Merrrill Lynch downgrades tobacco stocks UST Inc (UST) and RJ Reynolds (RJR) to NEUTRAL from Buy. The UST downgrade is based on concern over the forthcoming McMullin trial in Florida. With respect to RJR, firm believes it is the weakest of the big four companies with exposure to the U.S. cigarette mkt.
07:52 ET Merrill Lynch cuts estimates and downgrades select storage stocks
Merrill Lynch lowers their weighting on the storage sector to Neutral, as the fundamentals of the storage sector are not improving as expected and investors are not willing to wait; cuts 2003 rev ests and downgrades BRCD, ELX, and NTAP to Neutral from Buy, and cuts QLGC's 2003 rev est and maintains Neutral rating.
07:50 ET MAR Marriott beats by $0.04; updates guidance (28.40)
Reports Q3 earnings of $0.46 per share, $0.04 better than the Multex consensus of $0.42. Revs rose 4.6% yr/yr to $2.45 bln vs the $2.34 bln consensus. For Q4, co sees EPS of approx. $0.54-$0.58 (Multex consensus $0.51) excluding after-tax gains.
07:45 ET MOT Motorola upgraded at JP Morgan (10.15)
JP Morgan upgrades to OVERWEIGHT from Neutral, saying semis (heavily weighted toward communications vs. the Intel PC semi-cycle) should continue to lead sector operating improvements and reach operating breakeven; also, unconfirmed speculation of MOT/SI swap appears to be heating up and may likely be a precursor to a deal.
07:43 ET ACMR A.C. Moore reaffirms Q3, full yr outlook (21.28)
07:42 ET DATM Datum Inc. expects delayed orders to impact Q3 results (7.29)
07:40 ET INVN InVision announces $87.7 mln order from the TSA (30.60)
Announces that the Dept of Transportation has ordered 25 new explosives detection systems (EDS) and funded the production of systems from all parts kits previously purchased. To date this year, the TSA has ordered systems and components from InVision valued at approx. $512.9 mln.
07:37 ET Taiwan LCD monitor producers expect moderate growth in October - Digitimes
Digitimes.com reports that Taiwan LCD monitor producers said they have received only limited orders, as major PC co's and distributors have been conservative in placing orders as falling TFT LCD prices have not stabilized and uncertainty remains over Q4 economic conditions; Taiwanese LCD monitor producers generally expect October shipments to increase only a moderate 10-20% from Sept, far below the traditional peak season pick-up. (Watch GNSS and PXLW for possible reaction.)
07:35 ET S&P futures vs fair value: +1.6. Nasdaq futures vs fair value: -1.0.
Both S&P and Nasdaq futures managing to hold near the flatline despite major warnings out of the banking sector (Bank of NY -14%) and in the Semi space (AMD -15%). Contributing to resilience in futures is further dissemination of reports yesterday that late mkt slide was exacerbated by the mother of all clerical errors. FT reports that Bear Stearns placed an order to sell $4 bln of S&P 500 index futures instead of the intended $4 mln sell. According to the NYSE, $622 mln of the transaction was executed before the order was cancelled out.
07:28 ET EDS EDS may renegotiate $6.9 bln US Navy deal - FT (13.35)
The Financial Times reports that CFO Jim Daley said there was a "possibility" that the co would seek to renegotiate the $6.9 bln Navy contract, as congressional requirements for testing the systems set in place after the contract was won had resulted "in significant build-up in unbilled receivables at the co"; however, the co said it was not actively seeking to restructure the Navy contract and said the co did not face any liquidity crisis.
07:21 ET Spitzer and Pitt working towards global settlement - WSJ
The Wall Street Journal reports that NY AG Eliot Spitzer and SEC Chairman Harvey Pitt are vowing to work together and come up with a "global settlement" to address conflicts of interest involving Wall Street research and questionable IPO practices.
07:19 ET EMMS Emmis Comms beats by a penny (20.10)
Radio station owner reports Q2 earnings of $0.04 per share, $0.01 better than the Multex consensus of $0.03. Revs fell 1% to $143.2 mln vs the $140.2 mln consensus.
07:15 ET Co's turn to air freight as dock strike continues - WSJ
The Wall Street Journal reports that worried manufacturers and retailers turned increasingly to air freight services from UPS and CGO as an alternative to ground transport as a lockout of West Coast dockworkers dragged through its fourth day.
07:13 ET ADTN ADTRAN guides above consensus (15.01)
Based on a "sequential increase in revenue with a significant increase in gross margins," co now sees Q3 revs of approx $88 mln and pro-forma earnings of $0.24-$0.26 (Multex consensus $84.95 mln and $0.14). On a GAAP basis, co sees EPS of $0.08-$0.09. |
