From Briefing.com: 8:09AM Motorola target raised to $15 at Wells Fargo (MOT) 12.20: Wells Fargo raises its target on MOT to $15 from $12. Firm believes that Motorola's handset division currently has three demand drivers that should provide additional growth above normal Q4 seasonal increases: 3G orders from Hutchison Whampoa, push to talk, and the launch of embedded camera phone models. Firm continues to believe that there is now possible upside to its Q3 and Q4 EPS forecasts for Motorola. Firm believes MOT should trade at a smaller discount to Nokia on a price/sales basis -- a 50% discount to Nokia would represent a fair valuation for MOT, thus $15.
7:46AM ASML Holding upgraded at Merrill Lynch (ASML) 13.82: -- Update -- Merrill Lynch out of Europe upgrades to Buy from Neutral, calling the co their favourite pure-play in the semiconductor sector; firm says the shares are now back to where they were trading after Q2 results and trade at a substantial discount to US peers, yet they believe a pick up in spending by customers is now much closer to becoming a reality and should provide a positive catalyst to the share price in the next 6 months; firm also says the strengthening Yen is a positive for ASML, as its only competitors are Japanese.
7:18AM ATI Tech beats by $0.02, guides higher for NovQ (ATYT) 16.28: Reports Q4 (Aug) earnings of $0.12 per share, ex-items, $0.02 better than the Reuters Research consensus of $0.10; revenues rose 70.8% year/year to $380.7 mln vs the $362.9 mln consensus. Co sees Q1 (Nov) revenue of $400-$430 mln.and adjusted net income should be flat to marginally higher vs AugQ. R.R. consensus for NovQ revenue and EPS is $394 mln and $0.12, respectively.
9:22AM The Technical Take : Another round of gains for the market averages on Thursday but is was far from a bull party as the push was limited and volume declined. Some of the fuel was used in in the previous day's strong run (also amid weaker volume) off of solid supports with traders taking a bit more cautious approach in front of this morning's jobs data.
We been concerned in the wake of the distribution days (losses on higher volume than previous day) early in the month and again last week which has been followed up with a lower volume recovery rally. However, the underlying sector action has remained constructive thus far in light of the recent retreat. A number of groups fell below their 50 day averages, a good indication of the intermediate term trend, but are back above. Two of the more important areas to watch are the semiconductor and financial sectors. The semi (SOX 429.79) index closed below its 50 day only one day but also of importance is the fact that it remained above its breakout point highs even on an intraday basis. The banking sector (BKX at 900.80) probed its 50 day but did not come close to a more important support at the lower end of its multi-month range during the slide with the upper end of this pattern now just ahead at 905.
Nasdaq Composite: As far as this morning is concerned, the market has benefitted significantly from the stronger than expected employment report. Based on the extent of the push in the pre-market readings, the index has potential to run to resistance in the 1860/1863 area in early action. This represents early month congestion as well as the 62% retrace of the recent slide. The next barriers are at 1866/1868 (initial pullback low/congest) and 1880/1882 and the 1892/1894 area. From this standpoint, it will take losses back below the 1845/1840 area to inflict any near term damage to this morning bullish bias.
To view the remainder of the Technical Take see the Stock Brief.
Send suggestions, comments or questions to -- Jim Schroeder, Briefing.com
8:48AM Page One - Ahead of the Open : The business cycle has not been repealed. The number of jobs increased in September. Stocks are up sharply, bonds are down sharply.
Non-farm payrolls rose 57,000 in September. This is the first increase since January. A return of steady job growth is the final piece of the puzzle to a classic business cycle upturn. The monthly numbers can bounce around, and October may or may not show another decent gain. However, this data will lay to rest the notion that somehow, "this time it is different". This "jobless recovery" must now be considered a recovery. This September increase has occurred at about the normal time following a business upturn. Non-farm payrolls will probably be rising 150,000 a month by December or January, returning to the long-term secular uptrend.
The other components of the employment data were less interesting. Average hourly earnings fell 0.1%, reflecting the lack of wage pressures and lack of corresponding inflation pressures. The average workweek was unchanged at 33.7 hour. The unemployment rate was unchanged at 6.1%
The numbers are clearly bullish for stocks, and the stock futures indicate a sharply higher open.
The corporate news is also upbeat. Siebel Systems (SEBL 10.55) announced that revenues in the quarter just ended would be $320 to $322 million, below expectations of about $330 million. However Siebel said, licensing revenue, reflecting new business, would be above expectations. This sign of increased demand augers well for upcoming quarters, and the stock is bid higher. Both First Albany and Smith Barney raised their rating on SEBL to "buy".
Starbucks (00C0 29.43) announced that revenue this quarter was above expectations, and the stock traded higher after the close.
Two Dow 30 stocks got a rating boost this morning. Lehman Brothers upgraded 3M (MMM 71.28) from "equal-weight" to "overweight" and set a price target of $85. UBS initiated coverage of JP Morgan Chase (JPM 35.02) with a "buy" rating and a $41 price target. On the other side of the coin, Prudential downgraded Medtronic (MDT 48.25) to an "underweight" (sell).
The lack of job growth was the last refuge of the bears. Now, the idea that consumer spending will slow down in the months ahead because of a continued loss of jobs seems implausible. Yes, there will be more jobs shifted overseas and layoffs in selected sectors. A growing economy, however, leads to more jobs. The US economy is huge, and 57,000 jobs is actually a very small number. However, it is a move in the right direction. The virtuous economic cycle may kick in even while monetary and fiscal policy remain stimulative. The long-term fundamentals are bullish. -- Dick Green, Briefing.com
7:02AM Early Research Calls : First Albany upgrading SEBL to Buy from Neutral... Piper Jaffray initiating coverage on XOMA with Outperform,$10 tgt... Lehman upgrading COT to Overweight from Equal Weight; also downgrading FST to Underweight from Equal Weight... Bear Stearns cuts HAS to Peer Perform from Outperform... UBS initiating coverage on JPM with Buy, $41 tgt... Merrill Lynch calling CF too inexpensive to ignore, now regarding it as their top Mid-Cap Bank value pick... JMP Sec initiating coverage on SNIC with Strong Buy, $24 tgt... Wachovia downgrading JEF to Mkt Perform from Outperform... In Europe, Merrill Lynch upgrading ASML to Buy from Neutral with a EUR 14.3 price objective.
8:26AM Deutsche downgrades paper stocks : Deutsche Securities downgrades DTC, IP, MWV, SSCC, TIN, WMO, and WY to Hold from Buy, and downgrades POP to Sell from Hold, citing weaker than expected fundamentals and the fact that the group trades within 10% of 52-week highs; firm says the Oct 1 price hike on uncoated free sheet papers appears dead, and while there are lots of reasons that other big players after IP haven't stepped behind the price hike: domestic demand remains weak, European demand is even weaker, and there are domestic coated free sheet and carbonless basestock mills now running uncoated free sheet and dumping it into the mkt.
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