MARKET TALK: With Spotlight On, Energy Stks Seen Rising
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
(Call Us: 201 938-5299; All Times Eastern)
MARKET TALK can be found using code N/DJMT
12:48 (Dow Jones) The Bush energy policy has already proven to be a catalyst
for many alternative power and power technology stocks. FAC/Equities analyst
Sanjay Shrestha doesn't expect the spotlight to fade soon. The group will
get a further charge from the public's heightened awareness of energy
issues, and from rolling blackouts in California and possibly in other parts
of the country, he said. (CCC)
12:39 (Dow Jones) Lehman's Dan Niles upgrades Marvell Technology (MRVL) to
buy, despite lowering the semiconductor company's fiscal 2002 EPS estimate
by a couple cents. "The decrease in EPS is due to lower gross margin
assumptions. Marvell is beginning to see stabilization from leading Gigabit
customers like Foundry (FDRY) and Extreme (EXTR). We believe that Marvell's
strong communications portfolio continues to see wins and is driving the
company through this inventory correction." (GS)
12:23 (Dow Jones) Fed Gov. Meyer is scheduled to testify next Tuesday before
a Senate Banking Subcommittee on "the stock market and its effect on the
economy." Also testifying will be ex-Fed Gov. Angell and Goldman Sachs'
McKelvey. (JC)
12:11 (Dow Jones) Analysts are aware of forex market's lack of direction and
see struggling worldwide pursuit of economic growth as main factor in
current forex market lethargy and likely future movement. JPY, rather than
EUR, is seen as key to next round of forex moves. (JRH)
12:04 (Dow Jones) Thinly traded Lands' End (LE) is up 5.6% after
BusinessWeek Online, citing sources close to the situation, reports Chairman
Gary Comer might be shopping the company around and last fall talked to
Sears Roebuck (S). Comer, 73, would be looking for an exit strategy,
BusinessWeek says, but as the controlling holder - he owns more than 50% -
he may also want too high a premium to the current share price of $37. A
buyer would get the indisputable e-tailing expertise of Lands' End, but
there are risks, not the least of which, is the profit viability of online
selling. Also, LE had a comeback 1Q, but catalog business remains volatile.
(GC)
11:55 (Dow Jones) For the ninth time in the past 12 months, Robertson
Stephens analyst Harry Curtis increased his EPS estimate for Internationl
Game Technology (IGT). He upped his fiscal 2002 view on the slot machine
maker Friday to $3.24 a share from $3.05, primarily due to its shift toward
100% ownership of progressive-system games. (DDO)
11:43 (Dow Jones) Make no mistake, despite the hype over electronic stock
market Instinet's (INET) IPO, its trading shows investors are still wary
about tech and financial issues and prefer those boring, Old Economy IPOs.
Instinet, which came to market amid much fanfare, is up about 25%, a strong
debut indeed. But contrast that with Global Power Equipment (GEG), a
turbine-equipment maker, which is up 50% on the NYSE. (RJH)
11:38 (Dow Jones) Niagara Mohawk's (NMK) 1,140-MW Nine Mile Point 2 nuclear
unit is expected to reach full power Monday, a source familiar with the
unit's operations said. A utility spokesman wasn't immediately available
Friday to confirm the information. (KAM)
11:32 (Dow Jones) Look for minor correction in stocks Friday, then
resumption of the rally next week, says Hilliard Lyons technician Dick
Dickson. Gains may be limited, though, given overbought condition of market
in intermediate-term (4-6 weeks). Look for DJIA test around 11400, 1350-70
on S&P 500, and 2500-2600 on Nasdaq. (TG)
11:21 (Dow Jones) Nortel Networks (NT) is basically flat, following report
of Alcatel's (ALA) interest in merging with Lucent (LU), indicating
investors don't see Nortel as a takeover target in the near future. With a
market cap of $45 billion, Nortel would be tough to swallow for any company
in good times let alone now. "I don't see anything imminent," says Paul
Sagawa, analyst at Sanford C. Bernstein. Still, if there was time to acquire
Nortel, now could be it, analysts speculated. CEO John Roth is set to retire
in April 2002, and the company hasn't identified a successor. Nortel no
longer has a large shareholder, since BCE (BCE) spun off most of its stake
in Nortel last year. Analysts suggest that Germany's Siemens AG (SI) or
Sweden's Ericsson (ERICY) would likely have the most interest in Nortel.
(BED)
11:16 (Dow Jones) Look for something in the neighborhood of a 1% revised 1Q
GDP, says Bear Stearns. Despite the jump in imports seen in the trade data,
year-over-year import growth fell to a nine-year low at 2.8%. (MSD)
11:07 (Dow Jones) More than Palm's (PALM) earnings warning issued late
Thursday, Andrew Neff, an analyst at Bear Stearns, was prompted to slash his
investment rating on the PDA maker to neutral from buy because its
enterprise strategy is now uncertain, since it terminated its acquisition of
Extended Systems Inc. (XTND). He also raised issue with Palm's cash
position, saying the company may need financing in the fall or it could
possibly be acquired under unfavorable terms. (DLF)
10:58 (Dow Jones) While Salomon Smith Barney's Gil Yang viewed Hercules'
(HPC) conference call Thursday as an opportunity for the company to campaign
for proxy votes, the merger update provided some significant information.
The company has said it is likely to sell itself in a two-step process with
BetzDearborn, its water-treatment business, going first. The sale would
likely set a floor for Hercules' downside risk of $10 a share. Without any
sale, Hercules shares could sink as $5 to $6 a share. If both steps are
completed, the upside could be $20 a share, Yang says. (CCC)
10:51 (Dow Jones) Got a jones to trade one third of the total outstanding
level of the Treasury market in one shot? TradeWeb has increased the maximum
size of a single trade to just under $1 trillion from the old limit of $1
billion. They cite dealer interest, and fact that rising trade sizes were
fast running up against the old limit. (MSD)
10:42 (Dow Jones) The average cycle low Fed funds forecast is 3.39%,
according to a Ried, Thunberg survey of 97 fund managers. It also found that
34% are forecasting the funds rate to bottom out at 3.5%. (MSD)
10:38 (Dow Jones) After spending a day with several Washington pols, CSFB
tobacco analyst Bonnie Herzog says she doesn't expect any FDA regulation or
tobacco legislation this year. "Not only is tobacco very low on the priority
list," Herzog says, "but Congress is buried right now." The analyst also
predicts that the DOJ lawsuit against the industry "will die a slow death."
Apparently Bush, in his budget proposal, cut funding for the department to
pursue its case. (CEG)
10:30 (Dow Jones) Shares of Palm (PALM) and Handspring (HAND) set new
52-week lows Friday on news Palm expects 4Q revenue of between $140 million
to $160 million - roughly half of its previous guidance of $300 million to
$315 million - due mainly to lower shipments of handheld computers. Palm
also terminated a merger proposal with Extended Systems (XTND), citing the
slowing economy for its actions. Following the news, a slew of Wall Street
analysts reduced their investment ratings on Palm. Handspring, which also
saw its rating cut by CIBC, was recently down 12.6%, while Palm was off 26%.
(DLF)
10:20 (Dow Jones) Merrill Lynch has bumped up its 2001 spot-WTI crude oil
estimate by 50 cents a barrel to $26.00/bbl. The revision reflects the
strength of oil prices so far this quarter. Given OPEC's improved compliance
of 72% to targeted cuts, Merrill Lynch analysts think their estimate for the
second half of the year could be conservative. Merrill's Steve Pfeifer also
raised his 2Q earnings estimates for the major oils by an average of 12%.
The increase reflects improving marketing margins as well as strong oil
prices. (CCC)
10:12 (Dow Jones) The euro rally after the Fed looks more and more like a
flash in the pan. "It had every chance to make a major rally and it failed,"
is one analyst's verdict. (JRH)
(END) DOW JONES NEWS 05-18-01 |
