From Briefing.com: Weekly Wrap : Stocks roared ahead again this week, as investors celebrated additional signs of a stronger than expected economic recovery... Today's surprising jump in nonfarm payrolls (+66k) and drop in the unemployment rate (5.5% v. 5.6%) were the icing on the cake... Earlier in the week, investors were treated to news that Q4 productivity was revised up to 5.2% - strongest since Q200; January Factory Orders rose 1.6%, with core capital goods (business investment) up 1.5%; and inventory/sales ratio of 1.33 the lowest since June of 2000; and same-store sales figures in the retail sector were generally bullish... If that weren't enough, Greenspan sounded downright giddy in proclaiming that the data suggest that the recovery is "already well under way." Just in case it needs a little help, Congress passed a tardy, scaled down ($42 bln) stimulus package that President Bush is expected to sign shortly.
Awash in good economic news, the bulls made their presence known with money flying off the sidelines and back into the market... Early stage recovery stocks such as housing, machinery, rails, trucking, paper, gave way late in the week to laggards such as technology and financials... Weeks winners led by Utility, Wireless Services, Networking Equipment, Internet Software & Services, Telecom Equipment, Semiconductor and Employment Services stocks... Losers led by the more defensive groups such as Health Care, Pharmaceutical, Beverage, Food, Gold and Household Product stocks.
Looking ahead to next week, focus could shift from the economic recovery to corporate earnings, and here the recovery news isn't as obvious... With market entering preannouncement season, some of the recent enthusiasm for stocks could wear off... Should note that 10-Ks are also due out soon and in aftermath of Enron, expect disclosures to be more detailed than ever - and that could mean some negative shocks... However, as long as economic data continue to show strength, setbacks are likely to prove limited and short-lived... Reports to watch this week include Retail Sales (3/13), Business Inventories (3/14), PPI (3/15), Industrial Production/Capacity Utilization (3/15)... See Briefing.com's Economic Calendar for details.
9:39AM Keithley Instruments seeing improving orders: Pac Growth (KEI) 24.50 +0.50: Pacific Growth in a pre-open note says checks have confirmed that the order outlook at KEI is rapidly improving, particularly within the semiconductor space but also with wireless test products; however, optical-related products will likely remain weak. Reiterates Buy rating.
8:52AM Motorola; Bear Stearns believes Jan/Feb very weak for handsets (MOT) 14.53: After a Bear Stearns hosted call with MOT last night, Bear Stearns' Ripple Effect says that operating margins are likely to be down in Q1 due to lower volumes; Bear believes Jan/Feb was very weak for the industry,supported by Intel's (INTC) cautious comments on flash memory; sees qtr being very back-end loaded for MOT and other cell players like NOK and ERICY.
8:21AM Intel: SG Cowen says update a non-event, but valuation high (INTC) 32.98: -- Update -- SG Cowen says that INTC's update last night was a non-event, and leaves Neutral rating and ests unchanged; however, firm says that aggressive pricing and slower PC growth are secular trends, and feels that a 50x 2002 EPS multiple is "peculiarly high" for a big company in a relatively mature technology mkt.
8:00AM Intel estimates lowered by Lehman (INTC) 32.98: Dan Niles at Lehman lowers Q1 and CY02 rev ests on INTC after the co toned down expectations last night; lowers Q1 rev est to the midpoint of the guided range of $6.6-$6.9 bln from $6.4-$7.0 bln, and raises Q1 EPS est (due to rounding) to $0.15 from $0.14; CY02 and CY03 EPS ests do not change. Raises gross margin forecast by 1% to 51% to reflect margin guidance of above the midpoint of the 50% (+/- 2%) range.
7:27AM National Semi estimates and price target raised at CSFB (NSM) 32.96: CSFB is positive on NSM after the co beat earnings estimates yesterday; firm reiterates their belief that the analog group has seen the worst, and says NSM should now benefit from: 1) significant operating leverage, 2) expanded customer base and footprint, and 3) favorable near-term end mkts (flat panel displays and wireless). Raises 2002-04 rev/EPS ests and raises price target to $38 from $30.
3:38PM Intel (INTC) 33.92 +0.94: --Morning Note-- INTC tightened Q1 revs guidance to $6.6-6.9 bln from $6.4-7.0 bln during its mid-qtr call last night. Analysts are positive on shares' long-term outlook; mixed on shares' near-term outlook. Merrill Lynch reiterates Near-Term Strong Buy rating on INTC, citing expanding gross margins will cause stock to outperform. Bear Stearns remains positive on INTC in H2Y02; anticipates choppy environment for INTC stock during next few months; would wait for shares to pull back below $30 to become buyers. Robertson Stephens maintains Mkt Perform rating on concerns about operating leverage and valuation.
3:22PM Sun Microsystems (SUNW) 9.85 +1.02: On last night's mid-qtr update call, mgmt reaffirmed its targets of "slightly up" revs for Mar Q, profitability for June Q; analysts' opinions mixed on turnaround. JP Morgan concludes "it was a great relief to hear the 'no change' conclusion", maintains Buy rating on SUNW's continued influence in enterprise mkt, solid mkt position in Unix, and discounted valuation. Goldman Sachs sees SUNW's risk/reward as favorable, maintains Recommended rating. Salomon Smith Barney is more cautious, points to current quarter revs tracking down sequentially, feels pick-up needed in Mar to meet consensus; reiterates Neutral rating and lowers their price target to $9 from $11. UBS Warburg believes update offered no sign of a turn, views strong bookings (up 18% q/q) in Dec as a result of push out from Sept events.
2:58PM Qualcomm (QCOM) 43.62 +2.18: -- Before Open -- Lehman Brothers hosted a series of positive mtgs with mgmt; QCOM endorsed Mar qtr $0.20 EPS guidance & 14M chips, incl 8M 1x chips. Co. believes it is an early leader in the development of GSM/W-CDMA chipset with the 6200 on track for Q3 2002. Lehman believes investors are likely to be encouraged by mgmt's constructive outlook and consider EPS in line with mgmt's $0.90-$0.97 achievable; rates valuation as attractive at current levels and maintains their Strong Buy rating.
2:52PM Goldman Tech Strategy : -- Before Open -- Goldman Sachs is slightly more bullish on sector. Firm stipulates "we are still in a very negative IT spending period and would not want to overstate the positive case for tech" but believes stocks should respond favorably should the macroeconomic data carry through to a true pickup in end-demand. Stresses risk/reward has shifted more positively with ests finally displaying the expectations for normal seasonality through the year; puts downside risk (at this point) as controllable. Names top trends/names as BRCD, EMLX, QLGC, and VRTS in Storage Networking, SYMC and ISSX in Security Software, ACN, EDS, and ACS in IT Svcs/Outsourcing, and MRVL in 1-Offs.
2:41PM Jabil Circuit (JBL) 26.37 +1.34: -- Before Open -- JBL signed an agreement to acquire ALA's facility in France for ~ $60 mln yesterday; as part of the asset transfer, JBL has agreed to a 3-year outsourcing deal to manufacture PBX and IP-based PCX comm systems for ALA; transaction is expected to close by early summer. Firms are positive on deal but remain fairly cautious on shares. Needham likes this deal as it brings JBL closer to ALA and will help JBL gain traction in Europe; reiterates their BUY rating but cautions investors that a "sobering" 3/19 conference call could weaken the stock from current levels. ABN AMRO is positive on the enterprise bus. exposure but is wary of JBL's decision to engage in high fixed cost operations in France; suggests investors take profits as shares have risen 34% in past week.
2:30PM National Semi (NSM) 34.60 +1.64: -- Before Open -- NSM surpassed consensus est by $0.06, reporting earnings of ($0.21) and guided May qtr revenues to $390-405 mln (in-line with consensus est) yesterday. Analysts are positive on the co/sector's recovery. CSFB continues to believe that they have "seen the worst" for the sector and believes NSM should benefit from its expanded customer base and favorable near-term end markets; maintains their Buy rating and raises their price target to $38 from $30. Robertson Stephens believe NSM's business has improved and maintains their Buy rating. Soundview rates NSM a Buy but continues to favor TXN and ADI as beneficiaries of the analog recovery, due to the cos' greater margin leverage and better mkt positions.
1:59PM UBS Warburg on Semis : -- Before Open -- UBS raises the price targets on Buy-rated AMAT ($57 from $51), ASMI ($27 from $22), ATMI ($34 from $28), and VECO ($33 from $30). UBS expects AMAT, ATMI, and VECO capex and wafer starts to show modest sequential increases over Q3 2003:Q2 2004 inclusive; adds that, for AMAT and VECO, fairly robust performance is already priced into stock and would be cautious about chasing momentum-driven rallies. Believes ASMI offers a strong 300mm investment theme for investors with a more aggressive risk/reward appetite.
12:56PM Taiwan Semi (TSM) 20.00 +0.34: -- Before Open -- Thomas Weisel reiterates Strong Buy rating and price target of $29 as yesterday TSM reported monthly sales for Feb '02 which were in line with firm's estimate. With Mar Q now two-thirds completed, firm believes investors should focus on the stocks that are most likely to benefit from the trends evident this quarter, and likely to remain strong throughout '02. Firm thinks TSM stands to be a primary beneficiary of the semiconductor recovery, as well the trends toward more complex technology manufacturing processes.
11:47AM Conexant (CNXT) 13.27 +0.16: -- Before Open -- AG Edwards downgrades to BUY from Strong Buy rating with price target of $15. CNXT has been quite strong over the last week as the overall market has similarly been strong and investors have had a chance to digest all of the news/issues affecting many in the communication IC sector. Firm thinks the next near-term catalyst could be Nokia's mid-quarter update on March 12. Firm notes that its wireless communications analyst expects Nokia to stand by its prior guidance.
10:38AM DSP Group (DSPG) 22.58 +0.28: -- Before Open -- CIBC Wrld Mkts initiates coverage with a Buy rating and price target of $26. Firm notes that DSPG has exhibited solid profitability in the past 18 months, even in the current weak semiconductor and telecom environments. Despite a mild 5% top line growth in FY01, well positioned to exhibit double digit growth as an improving economy helps semiconductors and consumer electronics. Firm sees strong order indications from a group of OEMs for soon to be released new products, a new DECT chip targeted towards the European market, and new products geared towards the bluetooth space.
18:56 ET 07-Mar-02
Intel (INTC) 32.98 +0.02: Pretty much a non-issue. The -0.40 move after the bell supports this view. Intel graduated from college football into the NFL. One of the big differences between the two levels is the width of the goal posts. Essentially, Intel simply narrowed the range on revenue expectations for Q1. Intel now sees revenue in the range of $6.6-$6.9 bln versus its prior range of $6.4-$7.0 bln. The current consensus estimate is for revenues of $6.77 bln. Gross margins are expected to be a bit better than expected....Specifically, Intel's microprocessor business continues to follow seasonal patterns, while its communications businesses remain weak. The wireless market remains weak, but management is seeing a bit of strength in the server market, a bit more than expected. Capital spending plans for 2002 remain at $5.5 bln, so semi equipment makers need not worry. The conference call was only 25 minutes and did not reveal much new information. This update does little to affect our outlook on Intel. The stock remains pretty expensive up here as it has already priced in a recovery. In fact, the whole sector has made a strong run of late. The Semi Index (SOX 611.01 +3.04) set a 6-month high earlier this week and is up 20% over the past week. The red hot sector is due for a bit of a pullback in the near term. Despite the improvement in the semiconductor industry over the past few months, it's a bit risky to be buyers at these levels, at least for the near term. -- Robert J. Reid, Briefing.com
finance.yahoo.com
Don what do you think on the chances of a pullback now?
The last six sessions have been amazing. I can't believe how much money I did not make because I was not fully invested on the long side. Cudos to those who have been!
RtS |
