RESEARCH ALERT - Merrill raises rating on Maxtor
Reuters, Monday, March 08, 1999 at 18:55
PALO ALTO, Calif., March 8 (Reuters) - Merrill Lynch & Co.
on Monday raised its rating on the shares of computer disk
drive maker Maxtor Corp. to intermediate-term buy from
intermediate-term accumulate, citing strong demand for personal
computers among other factors.
Merrill analyst Robert Hansen also said concern over the
disk-drive deal recently cut between Dell Computer Corp.
(NASDAQ:DELL) and International Business Machines Corp. (NYSE:IBM) has
unduly hammered the shares of Maxtor (NASDAQ:MXTR) and others like
Seagate Technology Inc. (NYSE:SEG) and Quantum Corp. (NASDAQ:QNTM)
"We think the carnage in the prices of disk drive stocks is
overdone," Hansen wrote in a Monday note to clients. He added
that Maxtor stock has plunged more than 50 percent since
hitting a 52-week high of $21.25 in late January.
Hansen also said:
-- he was comfortable with his first-quarter estimate of 17
cents a share on revenue of $697 million, largely because the
company recently told him that first-quarter shipments were in
line with expectations;
-- he expected Maxtor's unit shipments to be "flat to up
slightly sequentially (versus a mid-single digit seasonal
decline for the industry)";
-- Maxtor was upgrading its disk drives with faster
so-called GMR head technology and is ahead of its competitors
in making the transition;
-- channel inventories in the disk drive industry had
decreased to three to four weeks, down from double digits a
year ago;
-- Maxtor's penetration of PC makers was growing, having
signed up nine of the top 10;
-- overall PC demand "remains healthy, albeit off to a slow
start" in the first quarter;
Maxtor shares closed up 44 cents at $9.19 on the Nasdaq.
duncan.martell@reuters.com))
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