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Technology Stocks : Jabil Circuit (JBL) -- Ignore unavailable to you. Want to Upgrade?

To: Asymmetric who wrote (6115)	10/14/2002 6:31:18 PM
From: Sam	Read Replies (1) \| Respond to of 6317

Prudential downgrade hits EMS sector By Susan Lerner, CBS.MarketWatch.com Last Update: 4:23 PM ET Oct. 14, 2002 NEW YORK (CBS.MW) -- As countless stocks wallow around multi-year and even all-time lows, it's no surprise that investors are wondering whether it may be time to do a little buying. Free! Sign up here to receive our After the Bell Report e-newsletter! INFORMATION FOR : Create an alert for Add to my portfolio More cool charts on Discuss NEWS FOR More news for Quote & News Charts Financials Analysts Options SEC Filings TRACK THESE TOPICS My Portfolio Alerts Index: S&P 500 Index Add Create Column: The Ratings Game Create Company: Sanmina Corp Add Create Company: Celestica Inc Add Create Company: Jabil Circuit Inc Add Create Create A Portfolio \| Create An Alert But don't look at the electronics manufacturing services (EMS) sector, warns Ellen Chae, an analyst with Prudential Financial. Chae Monday downgraded her recommendation on the group to "market perform" from "market outperform." Prudential is "cautioning investors against broadly chasing the group as we believe a sustainable rally is unlikely given weak end demand trends, ongoing pricing pressures and increasing customer credit concerns," Chae wrote in a research note. Chae's remarks come on the heels of a surge in the group that exceeded the broader market's hefty rally last week. Her Top Tier EMS Index, she noted, gained 6.4 percent over the period, versus a 4.3 percent gain for the S&P 500 ($SPX: news, chart, profile). Excluding Sanmina, Chae said the group has rallied nearly 13 percent over the past two trading days. Sanmina (SANM: news, chart, profile) stumbled last week following a credit downgrade and a stock downgrade from another analyst. See related story. There was no improvement for Sanmina Monday, as shared dropped another 14 percent to $1.70 following Chae's comments. Others also fell: Celestica (CLS: news, chart, profile) lost 5.2 percent to $11.78 and Jabil Circuit (JBL: news, chart, profile) slipped 2.6 percent to $12.90. But Plexus (PLXS: news, chart, profile) added 1.9 percent to $9.21, Flextronics (FLEX: news, chart, profile) rose 1.1 percent to $7.14 and Solectron (SLR: news, chart, profile) gained 3.4 percent to $1.53. "With demand for communications equipment continuing to be weak, enterprise hardware having recently weakened and PC demand trends mixed, we are concerned that there are very few 'legs' left supporting demand for electronics goods and consequently our companies' services," Chae said. Indeed, Chae noted that she increasingly believes one of those legs --consumer spending -- is vulnerable, and that holiday spending could be disappointing. "Our checks with component suppliers along the supply chain indicate only the automobile and military segments showing meaningful year-end ramps," she said. Better trends were also suggested for consumer electronics and cell phones, she added, but said she would be cautious since lackluster sell-through data through the holiday season could result in an inventory overhang in the first quarter. To reflect the more muted outlook for revenue and margin recovery in 2003, Chae cut her estimates for Solectron, Sanmina and Plexus, and sliced her price targets across the board. Her estimates for Celestica, Flextronics and Jabil remained below consensus expectations. Despite the cautions words, Chae continues to rate Celestica, Flextronics and Solectron "buy," recommending those names to investors who want exposure to the group. "We believe CLS and FLEX remain best positioned longer term and are the most attractively valued (and) we continue to be encouraged by SLR's traction in its turnaround efforts and believe the shares have been oversold," she concluded. Susan Lerner is a reporter for CBS.MarketWatch.com.