At least someone is agreeing with me!
briefing.com
<Picture>Tech Stock Analysis
<Picture>
------------------------------------------------------------------------
Updated for: February 02, 1998
Please note: Briefing.com is provided as an information service only. Charter Media, Inc. and Briefing.com do not make specific trading recommendations or provide individualized investment advice. Readers should make investment decisions based on thorough research and their own investment criteria. See Disclaimer.
General Commentary
In order for last week's impressive gains to mean anything over the intermediate-term, we need to see some decent follow through buying... A failure to build on the gains would suggest that the market remains range bound and that, after testing the upper boundaries of their respective ranges, the indices are set for renewed weakness... But our short-term indicators point in the other direction... In other words, Briefing sees solid leadership and improved psychology providing the stepping stones to additional near-term gains... For the more bullish scenario to play out a couple things must happen... First, we need Lucent, Microsoft and Dell to follow Cisco's lead in breaking out to new high ground... Easily doable in that each stock is within a whisker of their respective all-time highs... Second, the sector needs to avoid any serious earnings shocks... Again, the outlook is promising given that the earnings calendar is light and that only a couple of big names are due to report... The biggest is Cisco which is scheduled for Tuesday... For details, see Briefing's Earnings Calendar... Finally, it would help if the market could go through another week without experiencing an Asian tremor... Recent improvements in those markets, while temporary, have provided a much needed boost to psychology and barring a new shock, techs should maintain their bullish bias.
Industry Updates
Computer Systems & Peripherals | Networking | Software | Semiconductor | Semiconductor Equip. | Telecom Equipment
Computer Systems & Peripherals
Brief: How about those disk drive stocks?... Given up for dead a month ago, the group has been resurrected by bargain hunters... Will the industry continue to outperform the market over the short-term, or is it time to take profits and run?... Based on the group's improved technical underpinnings, Briefing sees additional upside of at least 10%... That said, it should be noted that the long-term patterns remain bearish, earnings visibility is virtually non-existent and the risks are high... But aggressive, short-term traders might find Quantum, EMC, Seagate and Western Digital attractive investment candidates... As for the PC makers, the story for the week might best be titled the tale of two titans... It is again looking like the best of times for Dell shareholders as the stock is up smartly over the past few weeks... A break above the 103 3/4 level would almost certainly catapult the stock the 115 area over the near-term... On the other hand, Hewlett-Packard shareholders might be facing the worst of times... The stock is fast approaching pivotal support at 57 3/4 amid concern that company will come out on the losing end of the CPQ/DEC merger... A report last week from Merrill raising concerns over earnings doesn't help either... Another stock on the move is Unisys... UIS broke out of a four-month consolidation pattern and set a new 52-wk high last week... Targets move to 20... Salomon Smith Barney upped its rating on Sequent from neutral to outperform.
Computer Networking
Brief: Cisco dominated the headlines last week, soaring to a new all-time high... The stock's ability to sustain its momentum will be challenged when it reports its earnings on Tuesday... In light of recent gains, anything shy of a good number (stock typically surprises by no more than one or two cents) will be seen as a signal to take profits... Bay Networks could be the next big mover as stock nears key resistance at 29 3/4... A close above this ceiling targets the 37 area... Key support at 25 1/2 must hold for bullish scenario to have a chance at playing out... A laggard in this group has been Cabletron Systems... Stock is currently trying to build a base after falling sharply late last year... However, if stock can just break above 16, technical traders likely to bid CS up to gap resistance at 22 7/8.
Computer Software & Services
Brief: Since July of 1997, Microsoft has been in a relatively narrow trading range... Given the lousy performance of many tech stocks over this period, MSFT's sideways pattern was fairly impressive... But with market psychology improving, the stock's battle with the DOJ taking on a more conciliatory tone and new product launches around the corner, the stock is heating up once again... Look for the software giant to break out of its range this week and set its sights on the 160-165 area... Salomon Smith Barney upped its rating on Baan to buy from neutral after company reported solid earnings last week... One stock getting crushed was CyberMedia... Stock missed its earnings estimate by 95%... Hambrecht & Quist cut to a l/t hold from buy... Volpe Brown reiterated its strong buy rating on Excite and upped its price target to 55 from 46... Excite has led search engine group higher over past several sessions.
Semiconductor:
Brief: On the plus side, semiconductor stocks are among the best performers this year... However, before getting overly excited by the group's performance to date it is important to take a step back and look at the big picture... These stocks are still well off their recent highs and continue to exhibit bearish chart configurations... And while there has been little negative news from Asia over the past couple weeks, the region's problems are far from over... One stock which does look poised for additional near-term gains is Analog Devices... Stock broke key resistance late last week and is positioned for a near-term test of the mid-30s... Intel, Texas Instruments, LSI and Micron have also made impressive progress in recent weeks, though the pace of their recovery gains leaves a lot to be desired... On Friday, BT Alex Brown started coverage of Analog Devices and Texas Instruments with strong buy ratings, while initiating coverage of National Semi, C-Cube and Intel with ratings of market perform.
Semiconductor Equipment
Brief: One day after Merrill lowered its growth forecast for the group, the chip equipment stocks staged a nice recovery... Applied Materials (+1 11/16), Novellus (1 7/16) and KLA-Tencor (1 1/8)... Again, like the chip sector, the group's gains must still be viewed as corrective in nature... Even so, there is plenty of additional upside room over the short-term (in light of the steep declines registered late last year)... Technically, NVLS, TER and AMAT are best positioned to lead the industry higher... Adams Harkness upped Cymer to outperform from market perform in response to the company's better than expected earnings.
Telecommunications Equipment
Brief: Dain Rauscher upped its rating on Advanced Fibre to strong buy from buy... The firm was issued a less favorable adjustment to PairGain's rating, lowering the stock from a strong buy to a buy... Andrew Corp. succumbed to profit-taking falling 1 1/2 on Friday... Stock still up nearly 40% off its lows a few weeks back.
[ Index ]
------------------------------------------------------------------------
This page was downloaded by your browser Monday, February 02, 1998 01:54:31 ET and is the latest version available as of that time.
------------------------------------------------------------------------
Copyright c 1998 Charter Media, Inc. All rights reserved. |
