MARKET TALK: Invision Surge Not Paving Way For Caution
12 Mar 12:27
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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12:27 (Dow Jones) Six months after 9/11, Invision Technologies (INVN), which
makes bomb-detection devices like those used at airports, has seen its stock
price rise more than 1410%. It hit a 52-week high today and most recently is up
4.4% to $47.01. You'd think cautious option investors would be buying defensive
puts to protect gains, but it's the bullish calls that continue to be active,
traders note. In fact, there is even interest in calls expiring in further
months - perhaps because some investors think there is a horizon of some years
when these devices will still be in demand. Invision's March 50 calls, which
are out-of-the-money and will expire Friday, are still fairly rich and are up
55 cents to 75 cents Tuesday. (KT)
12:18 (Dow Jones) Nomura Securities has moved many of its staff back to the 2
World Financial Center office. The equity and fixed-income division, including
trading, sales and research, will be the last group to move and is expected to
be back in WFC by the end of March. All phone numbers would remain the same as
pre-Sept. 11. (JSX)
12:05 (Dow Jones) Credit Suisse First Boston Chief Executive John Mack tells
investors and reporters in London that he's certain more job cuts are coming in
the firm's investment banking division. (LC)
12:02 (Dow Jones) Corporate consensus seems to be that interest rates will go
higher by the end of the 3Q, if not sooner. On that note, it's understandable
why GE Capital would offer $3B of 30-year debt, taking advantage of those
rates. But why would they then offer $2B of 3-year floating-rate debt at the
same time? Talk is that tranche is on reverse-inquiry (buyer-driven). Makes
sense, but has not been confirmed. In any case, deal expected to be a huge
success. (KG)
11:49 (Dow Jones) As Pitney Bowes (PBI) shares approach Deutsche Bank's $45
price target (18.8 times the firm's 2002 EPS estimate), Deutsche Bank decides
to downgrade the stock to market perform rather than change its target. "We
like Pitney's market, competitive position, strategy, execution and shareholder
focus, but believe that at current levels the shares are fairly valued." PBI
shares are retreating from Deutsche's price target, down 4.3% to $41.98. (GS)
11:40 (Dow Jones) The recent strength in Japan's Nikkei stock index could be
bad news for Bank of Montreal (BMO), unless you are a short seller. Merrill
Lynch finds that over a 20-year period, one of the best stocks to short or
underweight when Japan outperforms the rest of the world has been Bank of
Montreal, strategist Robert Spector notes. For Spector, the correlation
demonstrates the advantages of cyclical stocks over defensive and interest-rate
sensitive issues amid signs of an economic rebound. In support of this view,
Merrill's data also show that defensive names such as Gillette (G) and Pfizer
(PFE) also underperform the rest of the world when Japan's equities are
outperforming, and Canadian metal stocks "strongly outperform" the Canadian
banks when this happens, Spector said. (BED)
11:34 (Dow Jones) Shares of EarthLink (ELNK) are on the move up Tuesday after
the company announced it will offer high-speed Internet service through AT&T
(T) Broadband's network. John Corcoran at CIBC World Markets says the deal will
expand EarthLink's footprint for broadband cable. He notes AT&T Broadband is
the largest cable operator in the U.S. EarthLink has already nailed a deal with
another cable biggie - AOL Time Warner (AOL) - and is in active negotiations
with Comcast (CMCSK) and Cox Communications (COX). Earthlink stock up 10% at
$10.65. (RS)
11:19 (Dow Jones) It's time for Treasurys to repair last week's damage.
There's not a lot outside of stocks to set the tone right now, and strategists
say that yield levels are out of whack with what sort of rate hikes the Fed is
likely to deliver later this year. Two-years are the day's best performer, with
the yield down 6 BP to 3.50%. (MSD)
11:06 (Dow Jones) AaiPharma (AAII) received antitrust clearance from the
Federal Trade Commission for its proposed acquisition of Eli Lilly (LLY)
product lines. AaiPharma's NeoSan Pharmaceuticals unit agreed to buy the U.S.
rights to Eli Lilly's Darvon and Darvocet pain products for $211.4 million plus
other considerations. The purchase price is subject to potential reductions
based on initial sales performance. (BS)
10:56 (Dow Jones) Early options-market snapshot: the stock selloff early
Tuesday hasn't rankled the options market much, although defensive put trading
is on the rise. At the CBOE, the equity put/call ratio after the first hour is
at 0.61, compared with 0.48 Monday and readings no higher than 0.57 since this
month began. The put/call ratio for index options is hardly high at 1.20, but
is up from Monday's low 0.90. (KT)
10:49 (Dow Jones) The weakness that afflicted stocks right at the open is
firmly in place. Would you be surprised to hear that the communications
technology sector is the worst acting group out there? No, probably not. Some
of the downtrodden in that space include Lucent, JDS, Comverse, Corning, and
Sonus. Home builders, gold, and pollution control look good, and the overall
action, while weak, looked like it may be uglier earlier. DJIA off 61 at 10549,
Nasdaq Comp drops 37 to 1892, and S&P 500 dips 10 to 1158. (TG)
10:35 (Dow Jones) SatCon Technology (SATC) entered a strategic collaboration
agreement with the Chevron Energy Solutions unit of ChevronTexaco (CVX). Under
the agreement, SatCon and Chevron Energy Solutions will work to test in-plant
power quality or power generation concepts. The agreement provides that Chevron
Energy Solutions may execute a supplier agreement to market SatCon's static and
rotary uninterrupted power supply products and otherproducts. SATC up 2.6% to
$4.10. (TAG)
10:28 (Dow Jones) "As far as scheduled data releases are concerned, March is
unlikely to bring relief to the beleaguered Treasury bond market," says Goldman
Sach's Jan Hatzius. "The calendar is likely to feature accelerating production
growth, still-strong final demand, and rising prices, at least on a headline
basis." (JCC)
10:21 (Dow Jones) Itron (ITRI) restated financial statements of six past
quarters because of changes in its accounting for certain outsourcing
contracts. The company said that in February it determined it should have
adopted service contract accounting for certain outsourcing contracts where it
retains title to the related equipment. It changed its method of accounting for
these contracts from the percentage of completion method to service contract
accounting. Shares off 8% at $25.20. (DL)
10:07 (Dow Jones) The economic recovery has encouraged J.P. Morgan to upgrade
Black & Decker (BDK) to buy from long-term buy. "The strength and breadth of
the economic recovery allays our concerns over the company's exposure to
certain industrial markets, and in fact, adds upside to our expectations in all
of BDK's end-markets." The firm adds that BDK's valuation (16 times JP Morgan's
2002 EPS estimate) is nearly 20% below its peer group average. BDK up 3.3% at
$47.88. (GS)
9:59 (Dow Jones) After meeting with Merrill's (MER) management, Pru says the
company's new approach to managing its business is much more scientific and
lasting than the firm is getting credit for. Merrill didn't just lay off a lot
of people, but instead is establishing a new profitability-vs.-market-share
culture in the firm. Management seemed more upbeat about the revenue outlook
for the second half, and a greater emphasis on forex, equity derivatives, and
private equity could provide even more lift. Pru keeps buy rating, $64 target.
MER off 1.7% at $53.10. (TG)
9:51 (Dow Jones) New violence in Mideast is helping the dollar, traderssay.
EUR/USD is $0.8712; USD/JPY is Y129.05; EUR/JPY is Y112.44. (JRH)
9:46 (Dow Jones) Fed funds futures prices rising in tandem with Treasury
prices. "It's because accounting procedures are being looked at" and that is
impacting stocks, pit trader says. Where the May contract looked for about a
77% chance of a 25-basis-point tightening at Monday's close, they now look for
a 67% chance of a quarter-point tightening by the May meeting, trader says.
(CMN)
(END) DOW JONES NEWS 03-12-02
12:27 PM |
