IBM's 2Q Outlook Will Be Key Market Driver
Edited by Ray Hennessey
Of DOW JONES NEWSWIRES
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11:23 (Dow Jones) Of the 700 or so companies to report earnings this week,
listen carefully to IBM (IBM), suggests Greg Smith, Prudential's chief
investment strategist. "I think IBM is a pretty key report, as we will
likely see them make the quarter but could hear something discomforting on
the second-quarter outlook." (RJH)
11:15 (Dow Jones) Wachovia (WB) is trading at a premium to First Union's
(FTU) bid, suggesting investors expect rival to step in with a sweeter
offer. Under the terms of the merger agreement, announced Monday, First
Union is offering two of its shares for each share of Wachovia. Based on
First Union's recent stock price of $29.85, Wachovia is valued at $59.70.
Wachovia, however, changed hands recently at $61.80, a $2.15 premium to
First Union's offer. "The possibility of other buyers is the sole reason it
is trading at a premium," said one takeover trader. (JAW)
11:08 (Dow Jones) Credit Suisse analyst Larry Raiman is rejiggering his
ratings on REITS, becoming "slightly more opportunistic with a few office
names and taking some profits off the table in health care." He's raised
Equity Office (EOP) to buy from hold and SL Green (SLG) to strong buy to
buy. Cut, though, from buy to hold were Health Care Property (HCP) and
Nationwide Health (NHP). (RJH)
10:59 (Dow Jones) Joining a growing chorus on Wall Street, Credit Suisse
First Boston analyst Mark Kastan expects XO Communications (XOXO) to
announce a scaled back business plan by April 26, when it reports
first-quarter results. He still rates XO Communications at strong buy. (CBN)
10:51 (Dow Jones) If successful, U.K. reinsurer Benfield Greig's bid for
E.W. Blanch (EWB) will make it the third largest reinsurance intermediary in
the world behind Aon (AOC) and Guy Carpenter, a unit of Marsh & McLennan
(MMC), Merrill Lynch says. The offer is 13.5-times Merrill's 2001 earnings
estimate and under one-times revenue. "We note that our confidence in these
estimates has been low," the firm said. Merrill removed its rating on E.W.
Blanch on Monday, given the pending acquisition. E.W. Blanch recently traded
up 63.3% to $13.10 on news of the merger. (CUB)
10:43 (Dow Jones) Strong flows into stock mutaul funds in the latest period.
Stock funds took in $5 billion over the two days ended last Wednesday, the
highest since the $6.3 billion inflows for the period ended March 8,
according to TrimTabs.com. The fund tracker's analysis: The number indicates
"the public has not given up on the stock market," and that the continued
outflows in the previous weeks meant people were "merely raising cash in
order to pay capital gains tax." (YXH)
10:35 (Dow Jones) Though faring better than Nasdaqs, June S&Ps are still
searching for footing amid low volume. "They are so choppy now - can't seem
to get direction," said one floor trader, who cited lack of players and
mainly locals supporting volume. (ZHS)
10:30 (Dow Jones) Morgan Stanley analyst Mark Edelstone warned Monday that
semiconductor investors should brace themselves for another "sharp"
sequential decline in revenue for the second quarter. The analysts, who
trimmed his estimates on Intel (INTC), Broadcom (BRCM), Lattice
Semiconductor (LSCC), and Xilinx (XLNX), said year-over-year revenue growth
will continue to fall until Aug. or Sept. and remain negative until the
first quarter of '02 or early in the second quarter of '02. On a bright
note, Edelstone said that easier earnings comparisons, stronger economic
fundamentals and the completion of the current inventory correction, will
enable chip companies to have sequential revenue growth sometime in the
second half of the year. (DLF)
10:22 (Dow Jones) The low-$50 level for Kohl's (KSS) stock marks an interim
bottom for the stock, and presents a rare opportunity to buy it at a decent
price, says Donald Trott, an analyst at Jefferies. Kohl's will add 17 new
stores in the Northeast to its sales base in April. And given that Kohl's
apparel sales are mostly concentrated in basics, it won't have to take heavy
markdowns in April, Trott says. If April's weather is decent, comp sales
could increase in the high-single digits, he says. That could set the stock
rolling "back to the high $60s over the next several months," Trott says.
(JMC)
10:14 (Dow Jones) Merrill Lynch's (MER) move to increase the interest rate
spread at its Merrill Lynch Banks could help its bottom line, but drive away
some customers, says Amy Butte, a Bear Stearns analyst. Butte says the
interest rate changes could generate as much as 38 cents a share for the
firm on an annual basis as it moves to increase its private client margins
by 20% by 2003 and renew its focus on $1 million-plus clients. However,
Butte said there is the potential for a client "backlash" and some
competitors will likely use the opportunity to gain market share. (CUB)
10:05 (Dow Jones) June Nasdaqs reopen weaker after hitting limit down and
triggering trading curbs. Now at 1683, but has already tested a key support
area of 1673, floor traders said. (ZHS)
10:01 (Dow Jones) Drug maker Eli Lilly (LLY) beat first-quarter earnings
views by a cent on strong sales of antipsychotic Zyprexa and its
diabetes-care franchise, as well as other older drugs that have begun to
wane like Prozac. One of the keys to Lilly's near-term success is its
ability to handle generic competition for Prozac and branded competition for
Zyprexa. As long as it can maneuver these battles, Lilly can likely attain
whatever it wants, said HKS & Co. analyst Hemant Shah. The drug maker guided
the Street to an earnings range of 73 cents to 75 cents a share for the
second quarter, above consensus of 71 cents, and reiterated 2001
expectations of $2.75 to $2.85 a share. Analysts are expecting $2.81 a share
for the year. (BMM)
9:53 (Dow Jones) Plug Power's (PLUG) new management appears to be "following
the path of least resistance" on the road toward commercialization of its
residential fuel cell, says Lehman analyst Daniel Ford, after Plug's analyst
meeting last week. The strategy appears to be working. Not only will the
company's first products hit the market in the third quarter, which is
sooner than expected, it also expects to post a narrower-than-expected loss
of between $1.60 to $1.70 this year, Ford says. Although Plug has enough
cash to make it through the second quarter of 2002, it plans to raise $80
million in cash by the third quarter, he says. (CCC)
9:50 (Dow Jones) June Nasdaqs have come under pressure in morning trade,
hitting first limit down of 42 points. A 10-minute trading period is in
effect, following which, if the contract trades below limit, a two-minute
trading halt will be observed. The next limit is 85 points. (ZHS)
9:47 (Dow Jones)- Don't count an upgrade for semiconductor stocks by Richard
Bernstein, Merrill Lynch's chief quantatitive analyst who considers measures
like the value of assets, projected sales patterns and the cost of capital.
"It's premature," Bernstein says. Commodity prices continue to decelerate
and semiconductor stocks have never gone sustainably up in such an
environment, Bernstein says. (KJT)
9:41 (Dow Jones) Bank of New York (BK) saw improved first-quarter results
despite a decline in the equity markets thanks to its fee-based businesses.
Gains in securities servicing, private client and foreign exchange drove
profits 13.6% higher to $384 million, or 52 cents a diluted share, which was
in line with Wall Street's outlook. (CUB)
(END) DOW JONES NEWS 04-16-01
11:23 AM |
