From Briefing.com: It was a roller coaster kind of day for the Nasdaq on Wednesday as neither buyers nor sellers were able to force the action with any great deal of conviction. A telling snapshot of that reality is reflected in the breadth and volume figures as advancers scored a narrow victory over decliners at the Nasdaq while up volume came in just ahead of down volume. Despite the bullish edge in those measures, though, the Nasdaq still came up a hair short of finishing with its third consecutive gain.
Interest rates played a role in Wednesday's indecisive action as the yield on the 10-yr note hit 4.57% following the stronger than expected July Retail Sales report and another wave of convexity selling. The backup in rates mitigated the enthusiasm surrounding the Retail Sales report, and like before, undermined buying efforts.
The dip into red figures might have been more significant if not for the rally in the semiconductor sector, and specifically, the semiconductor equipment stocks. Credit for the strength in that area goes to Applied Materials (AMAT 19.07 +0.62), whose claim that 2004 will be a major investment period for 300mm tools struck a chord with investors. CIBC, for its part, raised its rating on AMAT to Sector Outperform from Sector Perform and bumped up its price target to $27 from $20. Briefing.com conceded that AMAT's report wasn't necessarily bad, but at the same time, we maintained it wasn't strong enough to validate the premium multiple it carries. Admittedly, we were surprised by the semiconductor sector's strength on Wednesday, but we still think the stocks are overvalued and we would be looking to book some profits at this juncture.
On Thursday, the initial claims data should set the tone for early trading and then attention will shift to Dell (DELL 31.31 -0.46), which is scheduled to report its fiscal Q2 (Jul) results after the close. The Reuters Research consensus EPS and revenue estimates stand at $0.24 and $9.73 bln, respectively.-- Patrick J. O'Hare, Briefing.com
5:43PM Wednesday After Hours price levels vs. 4 pm ET levels: The regular session's ennui has carried over into the after hours session, in which stocks have traded in lackluster fashion. Presently, the S&P futures, at 984, are 1 point above fair value, and the Nasdaq 100 futures, at 1242, are in line with fair value.
Shares of tonight's headline report, Brocade (BRCD), have stumbled following the switch maker's in line Q3 (July) report. Brocade's non-GAAP income of $0.01 per share, excluding deferred stock compensation related to acquisition of Rhapsody Networks, met the Reuters Research consensus estimate. Revenues fell 12% from year-ago levels to $133.5 mln. Arch rival MCDT has traded lower in sympathy with BRCD
Ann Taylor (ANN), however, has gotten a boost in the extended session following its in line Q2 (July) report. ANN turned in a 15% increase in EPS, to $0.45, and matched the consensus estimate after raising its outlook on August 7. Net sales growth of 14%, to $390.2 mln - that was fueled by a 5% increase in comparable store sales - was responsible for the stronger guidance. Looking ahead, ANN said it remained comfortable with the current EPS guidance for the fall season ($0.98-1.04 specifically), and said it projected Q3 (Oct) and Q4 (Jan) EPS of $0.57-0.61 and $0.41-0.43, respectively - both of which were in line with consensus estimates.
Another retailer, Vans (00C0) has made the news wires tonight. The company announced that CFO Andrew J. Greenebaum was resigning for personal reasons, effective as of August 30, 2003, and Scott J. Blechman, the current VP of Finance, will be appointed in his place. Vans added that Q1 (Aug) same store sales were currently trending up approximately 13% and consequently, the company is more comfortable with the high end of its previously announced EPS range of $0.55-0.58.
Additionally, Standard & Poor's announced changes to the S&P 500 and S&P MidCap 400 indices. Medco Health Solutions, which is being spun off by S&P 500 component Merck (MRK), will replace McDermott Intl (MDR) after the close of trading on August 19th, and Hovnanian Enterprises (HOV) will replace MidCap 400 component Airborne (ABF) after the close of trading on August 15th.
Tomorrow, the market will digest several economic reports, the most influential of those being initial claims for the week of August 9. Economists look for the data to check in below the 400K mark, a level synonymous with payroll declines, for the 4th week in a row, at 393K. As for earnings reports, Target (TGT) will be reporting before the open, and BEA Systems (BEAS), Dell (DELL), and Kohl's (KSS) will be reporting after the close.
For more detail on these, and other after hours developments, be sure to visit Briefing.com's In Play, Earnings Calendar and Guidancee pages. -- Heather Smith, Briefing.com
1:31PM Brooks Automation upped to Buy from Hold at Wells Fargo Sec (BRKS) 18.90 +0.70: The upgrade is due to better visibility into 2nd-half fab projects, an improving order outlook at key OEM customers, a commitment to reach breakeven by the DecQ, and a new AMHS product that should give Brooks a leg up in winning some of the 300mm monorail business opportunities in three different fabs in the second half. Price target $27.
11:44AM Applied Materials upgrade details (AMAT) 18.89 +0.44: --Update-- CIBC issued positive comments on AMAT this morning on heels of co's Q3 earnings report. Firm believes that better Q3 results & above average bookings momentum provide confirmation of superior fundamentals ahead for the bellwether. Believes that strengthening backdrop continues to add visibility into '04 and above average confidence in technology-driven retooling cycle from which AMAT foremost beneficiary. Believes investors should accumulate stock now for 50% upside to yr-end. Price target goes to $27 from $20.
11:29AM Fechtor out with Intel on Intel 24.60 +0.22: Fechtor Detwiler out with call this morning suggesting Intel's production numbers for July signal positive trajectory. The Co's wafer starts have increased approximately 20% on a sequential basis as compared to June despite a modest decline in June as P4s and Springdale chipsets were released to market. Firm notes since the beginning of the year, production/output has more than doubled and incremental data suggests increase illustrates positive upwards trend year to date.
11:05AM EMC/VRTS highlighted in Legg Mason Storage Survey : Legg Mason says it has learned that Veritas (VRTS) is currently offering a free license swap to Legato backup software customers. Firm thinks this news is potentially positive for VRTS and negative for EMC (EMC 11.45 +0.10), which is counting on a meaningful revenue contribution from Legato for 2004 sales.
9:34AM Pacific Growth sees NTAP's agreement with VRTS as a "major opportunity" (NTAP) 17.01 +0.04: NetApp and Veritas (VRTS 30.57 -0.04) made what Pacific Growth calls a very exciting joint press release yesterday detailing expanded efforts between the 2 firms on joint field engagement with common customers, additional cooperation/product integration efforts in backup/disaster recovery, SAN management and archiving/information lifecycle management. Firm says this announcement is important to both companies. For NTAP, this is a major opportunity in the firm's view, especially in the many G2K accounts that don't have much NTAP product installed but have VRTS backup software.
9:10AM Maxim Integrated upped to Buy from Hold at Wedbush Morgan (MXIM) 39.75: --Update-- Firm sees increasing signs of better macro environment especially in the U.S., which should develop into a tail wind for MXIM in its FY04. Price target $57.
9:02AM Juniper Networks solutions selected by China's Zhejiang Electric Power (JNPR) 13.45: Announces that Zhejiang Provincial Electric Power has chosen its solutions to build a high capacity backbone network that will span China's industrial and emerging high-tech province of Zhejiang.
Nasdaq Composite: We have often highlighted the 1686 level (June trading range top) as a key level and yesterday it matched up approximately with the 20/30 exp moving averages. Sustained action above on a daily basis (intraday marks 20 period ema on hourly chart) bolsters the view that the nearly month long pullback was merely part of a corrective phase within the context of the intermediate term uptrend. The chart below is an hourly of the index with the levels that we of technical interest during this recent decline. Initial resistance is in the 1700 congestion area with a secondary barrier marked at 1707. Near term supports are at 1680 and 1676 (50 day simple mov avg).
The market fundamentals remain excellent. Economic growth is clearly accelerating. Earnings growth has been strong. The Fed is going to keep short-term rates low, which should at some point cap the rise in bond market yields. The stock market is still in a trading range and may not rally strongly for a while, but the risk/reward relationship has improved to the point where investors may want to start looking past the August angst and slumber to a possible renewed uptrend in the fourth quarter. - Dick Green, Briefing.com
Aeroflex (ARXX) 7.91 -0.19: After the close, reported Q4 (Jun) earnings of $0.06 per share, excluding a $1.1 mln bankryptcy charge, in line with the Reuters Research consensus of $0.06; revenues rose 18.7% year/year to $78.6 mln vs the $78.4 mln consensus. Co. sees Q1 EPS of $0.04, ex items, in line with R.R. consensus of $0.04.
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