To: wlheatmoon who wrote (65479 ) 9/30/1999 4:22:00 PM From: Cynic 2005 Respond to
<<Charles Schwab Corp. (SCH) 33 7/16 -1 1/16. Wall Street is catching up with the market in recognizing that Internet brokerage stocks have lost their luster. Internet brokerage stocks such as Ameritrade, E*Trade, and Schwab (SCH) surged 300% to 700% this spring amidst a market rally and day trading frenzy. Since April, however, these stocks have been drifting steadily lower, and with good reason. Brokerage stocks, and Internet brokerage stocks in particular, are leveraged plays on the market. When the market rises, trading volume goes up, day trading explodes, and brokers make more money. The reverse, however, is also true. And lately, volume is down and even more so in Internet stocks that day traders love. Wall Street has finally noticed. On Tuesday, Salomon Smith Barney put out a very lukewarm report on the industry and rated most Internet brokers as "neutral" with price targets that suggest limited appreciation potential. Today, Morgan Stanley Dean Witter cut estimates on Charles Schwab (SCH) for 2000 to $0.79 from $0.85 per share and dropped the price target to $44 from $50, citing lower trading volume and competitive pressures. The new earnings estimate takes them below the current consensus of $0.83 per share and represents a slight break from the pack by a leading analyst. Cuts from other analysts could follow. SCH is down on the news, and unless market activity picks up around the holiday season (which it could), SCH could continue to drift. After all, it is still up 100% on the year and trades at 42 times next year's earnings. It hasn't gotten cheap because it has dropped. Briefing.com took SCH off our Core portfolio suggestions in June with the stock near 46, and we remain cautious. There will be time to get back in if it becomes a trading vehicle again, but for now, the upside is not exciting. - DG>>
