DJ MARKET TALK: Look For Wide 2Q Revenue View From Intel
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
10:49 (Dow Jones) Considering Intel (INTC) gave a mid-quarter update last month, analysts aren't expecting any surprises out of the chip maker when it reports 1Q earnings after the close. As for its 2Q, some Wall Street watchers expect Intel to talk of seasonal weakness and provide a wide revenue target. Douglas Lee, an analyst at Banc Of America Securities, predicts the range will be between $6 billion and $6.7 billion. While the 2q is usually down sequentially about 3%, Lee said it could be a little worse. Salomon's Jonathan Joseph, however, said the 2Q seasonal weakness is already priced into the stock. The analyst has a 12-month price target of $45 on Intel. Stock recently trading up 5% at $29.61. (DLF)
10:39 (Dow Jones) "Although it remains somewhat premature to draw firm conclusions, the data received thus far have been very poor, and this reinforces our belief that the final results on seasonal tax receipts will generate sizable upward adjustments to official budget deficit forecasts for the current and future fiscal years," says Goldman Sachs' John Youngdahl. (JCC)
10:28 (Dow Jones) Surpassing eBay (EBAY) and Amazon (AMZN) in online popularity during March was something called the Gator Network, according to Jupiter Media Metrix (JMXI). No, it's not for devotees of the University of Florida's football team. It's Gator Corp., a Redwood City, Calif., maker of Internet software including the eWallet, which remembers login names and passwords and fills in online forms with one click of the mouse. Gator had 32.2 million U.S. users in March, ranking No. 7 on Jupiter's list. The top three most-visited online properties remained AOL Time Warner (AOL), Microsoft's (MSFT) MSN and Yahoo (YHOO). (PDL)
10:20 (Dow Jones) Volatile forex trade continues, with EUR/USD triggering stops around $0.8820-25 before stalling at $0.8829, a new high for the day. The euro still needs to break above $0.8860-70 in order to get out of its tight range. (GMM)
10:15 (Dow Jones) Sprint's PCS Group (PCS) started the reporting season off strong for the wireless sector, adding 725,000 direct customers in the 1Q and posting better-than-expected customer churn at 3%. Don't extrapolate too fast. "Other companies are due to report in the coming days and they may not present as robust a vista as PCS," Lehman analyst John Bensche said, reiterating his buy rating. He notes Verizon Wireless, Cingular and AT&T Wireless (AWE) have all said pricing pressure has affected their businesses. (JDB)
10:03 (Dow Jones) At price levels of 98.03, July fed funds are pricing in a 90% chance of a quarter-point rate hike at June's FOMC. The probability is higher from Monday, but largely unchanged from last week, off-floor analysts said. (ZHS)
9:58 (Dow Jones) The revisions to industrial production in January (up 0.5% instead of up 0.2%) and February (up 0.3% instead of up 0.4%) make the 1Q look altogether stronger. Manufacturing output rose by 0.8% in March after gains of 0.2% in February and 0.6% in January. Importantly, these 1Q trends show that strong expected GDP growth, around 5%, is not just due to inventory swing, but was accompanied by strong production gains as well. Final point: since employment lagged, there was a huge productivity gain - fights inflation and props up profits. (JM)
9:48 (Dow Jones) WorldCom (WCOM) shares are getting a 9% boost after Goldman Sachs said Sprint's (FON) results Monday suggest a bottoming out in the long-distance market. The firm doesn't see a big pickup soon but thinks things won't get much worse. "With this probability, we think the likelihood is that pressure is relieved on WorldCom's stock, which may permit a $1 to $2 move. ... This is not a resounding recommendation, but in the world of telecom these days, if the downside seems limited, and there is some upside potential possible, it creates what has become a rare opportunity to make money on the long side of these stocks." WCOM shares adding 53c to $5.60. (GS)
9:38 (Dow Jones) Wall Street embraced Travelers Property Casualty (TAPA) on Tuesday, with five firms initiating coverage with a buy rating or better. Goldman Sachs analyst Thomas V. Cholnoky was the lone firm that initiated coverage with less than a buy rating - an outperformer, which is still positive. Banc of America Securities, Deutsche Bank, and Williams Capital Group rated the insurer as a buy. Merrill ranked Travelers as a near-term buy and a long-term strong buy, and Lehman rated Travelers as a strong buy. Tuesday was the first day that analysts could initiate coverage of the Hartford, Conn., insurer following its initial public offering in late March. On Monday, Travelers reported first-quarter earnings of $102.1 million, or 13 cents a share, compared with net income of $478.6 million, or 62 cents a share, a year ago. Shares off 1% at $20.20. (CUB)
9:28 (Dow Jones) The rise in industrial production is a strong sign of recovery and is particularly important because the Fed compiles these data and, so, pays a great deal of attention to it. The rise in capacity utilization to 75.4% from its low point of 74.4% in December is a sign that the slack can be used up quickly, allowing for new investment projects. (JM)
9:24 (Dow Jones) Sprint FON Group's (FON) reduced 2002 spending plans, cut Monday afternoon from $3 billion to $2.7 billion, will affect Ciena (CIEN) significantly, says Merrill Lynch analyst Tal Liani. "Although we believe that some will interpret the news as a modest positive for Ciena by removing some uncertainty and establishing a bottom, we continue to worry that revenue estimates have downside," Liani said, reiterating his reduce/sell rating on the stock. (JDB)
9:20 (Dow Jones) Treasurys are falling across the curve with the release of the above-consensus industrial production report. The two-year note is suffering badly - its yield is up 9 BP to yield 3.43%, while the 10-year note is up 7 BPS to 5.21%. (MSD)
9:15 (Dow Jones) The Fed reports healthy numbers on the manufacturing front: March industrial production was up 0.7% - the biggest gain since May 2000 - and capacity use jumped 0.5-point to 75.4%. Both numbers easily outdistance forecasts. (FL)
9:05 (Dow Jones) Merrill says Intel (INTC) should hit firm's revenue target of $6.785 billion and EPS target of 15c. Says Street worries that March weakness could endanger those numbers were misguided, and also thinks seasonal weakness has caused an overreaction in terms of full-year estimates, and Merrill keeps 73c view, which is above consensus. Price target is $40, and keeps intermediate-term strong buy rating. Over the longer term, Merrill also a buyer, but says keeping growth high enough to support Intel's 31x 2003 multiple could be a challenge. (TG)
(END) DOW JONES NEWS 04-16-02 |
