From Briefing.com: 5:57PM Monday After Hours prices levels vs. 4 pm ET: Today's broad-based rally has carried over into the extended session where the S&P futures, at 1158, are 2 points above fair value, and the Nasdaq 100 futures, at 1512, are 4 points above fair value. A number of encouraging earnings pronouncements have lifted the spirits of buyers in the after hours.
The below table lists tonight's most notable news items, and the reason behind the stock's resulting move:
After Hours Mover % Change Move Reason for Move
Abercrombie & Fitch (ANF) +4% Teen retailer tops the Reuters Research consensus estimates in its Q4 (Jan) report and reiterates its Q1 (Apr) outlook; Stock finds buying interest after the company (once again) grows earnings despite a decline in same store sales - see a Feb 5 Story Stock for more details - and initiates a $0.50 per share annual dividend
Agilent (0) -6% Electronics instruments & controls business falls short of the top and bottom-line consensus estimates in its Q1 (Jan) report; Agilent also reaffirms its Q2 (Apr) forecast and says it is comfortable with the range of analyst estimates for FY04; Traders still book profits from A's nearly 40%, 3-month run, with Q1's miss weighing on their minds
Broadcom (BRCM) +7% Semiconductor name schedules a conference call tomorrow (at 16:45 ET) to discuss its 'stronger business outlook;' This comes after management guided Q1 (Mar) revenues well above consensus estimates on it Q4 (Dec) conference call, citing strong booking trends
Network Appliance (NTAP) +7% Storage solutions provider exceeds the Street's Q3 (Jan) expectation by a penny on sales that increased 30%; Briefing.com predicted that the company would at least meet its Nov 18 guidance in its Earnings Preview on In-Play; Competitors include EMC, HIT, HPQ, IBM, and SUNW
Photronics (PLAB) +7% Small-cap manufacturer of photomasks reports Q1 (Jan) EPS of $0.07, $0.06 ahead of the Reuters Research estimate; Management notes in the release 'the growth driver for fiscal 2004 will be the increasing number of design releases utilizing 130-nanometer wafer processing technology'
Tomorrow, the market will greet a light earnings calendar and only two economic reports: January Housing Starts and Building Permits. The consensus estimates call for a slight decline in both readings.
For more details on these and other developments, be sure to visit Briefing.com's Stock Market Update and Daily Sector Wrap.-- Heather Smith, Briefing.com
4:32PM Photronics beats by $0.06 (PLAB) 19.58 -0.05: Reports Q1 (Jan) earnings of $0.07 per share, $0.06 better than the Reuters Research consensus of $0.01; revenues rose 11.2% year/year to $90.5 mln vs the $88.3 mln consensus.
4:29PM Broadcom schedules conference call tomorrow to discuss "stronger business outlook" (BRCM) 39.56 +0.93: Co announces it will conduct a conference with analysts and investors to discuss its stronger business outlook. The call will be held on Wednesday, Feb 18 at 4:45 PM ET.
4:26PM Bell Micro beats by $0.02 (BELM) 10.28 +0.38: Reports Q4 (Dec) earnings of $0.09 per share, $0.02 better than the Reuters Research consensus of $0.07; revenues rose 20.1% year/year to $639.5 mln vs the $588.7 mln consensus.
4:15PM Brooktrout Tech beats by $0.11, guides up (BRKT) 16.76 +1.01: Reports Q4 (Dec) earnings of $0.15 per share, $0.11 better than the Reuters Research consensus of $0.04; revenues rose 25.5% year/year to $22.3 mln vs the $20.3 mln consensus. Company sees Q1 revenues of $21-22.5 mln, consensus is $19.8 mln.
4:11PM Agilent misses by a penny, ex items; reaffirms Q2 guidance (A) 37.49 +0.41: Reports Q1 (Jan) earnings of $0.21 per share, $0.01 worse than the Reuters Research consensus of $0.22; revenues rose 16.4% year/year to $1.64 bln vs the Reuters $1.66 bln consensus (First Call consensus is $1.60 bln, which contains updates as low as $1.55 bln and were not updated after the co's Jan 26th guidance). Co reaffirms prior Q2 (Apr) EPS, ex items, in the range of $0.20-0.25 on revenues of $1.65-1.70 bln, Reuters consensus is $0.23 and $1.69 bln, respectively.
4:10PM Silicon Image beats by a penny, pro forma (SIMG) 11.11 +0.83: Reports Q4 (Dec) earnings of $0.03 per share, pro forma, better than the Reuters Research consensus of $0.02; revenues rose 27.4% year/year to $30.3 mln vs the $29.4 mln consensus.
4:04PM Kopin reports in line (KOPN) 6.60 +0.45: Reports Q4 (Dec) loss of $0.01 per share, in line with the Reuters Research consensus of ($0.01); revenues rose 28.1% year/year to $21.1 mln vs the $20.9 mln consensus.
2:54PM NTAP Earnings Preview 22.08 +0.38: Network Appliance (NTAP) is scheduled to report Q3 (Jan) results today after the bell, with Reuters consensus standing at $0.10 in EPS and $290.58 mln in revenues. Soundview expects NTAP to report Q3 results in-line with consensus, and believes that gross margins should remain robust and could tick up due to increasing sales volumes, limited price competition, and potential favorable HDD component pricing; however, firm believes that material upside to EPS (i.e. $0.02) is unlikely since gross margins need to increase 200-plus basis points or revs 10%-plus. Lehman expects the co to meet its Nov 18 Q3 guidance of 3-7% q/q rev growth (about $284-295 mln) and $0.10-0.11 in EPS, and believes the co will give Q4 (Apr) guidance for q/q revenue growth of 3-7% (consistent with the last several quarters), and expects the co to discuss new product and partnerships announced in Q3, as well as provide an update on the Spinnaker acquisition, which was expected to close in Jan.
2:34PM Nasdaq Composite probing short term resistance (COMPX) 2083 +30.40: -- Technical -- Minor new session high in recent trade has seen resistance at 2085 (Feb 02/13 highs) tested. Secondary barriers are at 2091 (last wk's high) followed by the 2100/2105 (congest, 62% retrace of Jan/Feb slide). Short term supports are at 2080 and 2077/2075.
1:14PM QLGC upgraded at Legg Mason; tgt $55 43.79 -0.25: Legg Mason upgrades QLogic to Buy from Hold; firm believes that the co is facing several substantial sales growth opportunities in the next 4 qtrs and that its prospects for maintaining its high operating margins during this timeframe are good; firm also believes that the doubts that have recently depressed the stock and created this buying opportunity (slowing sales, troubled disk chip biz, recent CFO departure) will prove temporary, and that within 2-3 qtrs the stock could appreciate to or beyond their $55 target as earnings growth begins to reaccelerate.
12:06PM Notable Mentions: AMAT, PKTR, MCDTA : Applied Materials (AMAT 21.77 unch): Ahead of tomorrow evening's earnings report, BofA Sec is suggesting that a blowout qtr is already priced in... Packeteer Inc (PKTR 16.20 +0.10): ThinkEquity comments that upcoming product launches from the likes of F5 Networks and a Cisco funded private company could heat up competition in the bandwidth management space. Firm estimates that PKTR represents approx 75% of the bandwidth management space and has had the luxury of limited competition since the company's inception... McData Corp. (MCDTA 7.82 +0.05) is added to the Focus List at Amtech; firm believes MCDTA is cheap at 1.8x sales in light of Cisco paying 4.5x for Andiamo and notes that stock is off 25% in less than a month. Firm removes Brocade (BRCD) from the Focus List following recent price recovery and view that risk/reward is more compelling now with MCDTA
10:21AM CMOS cut to Hold at Amtech 12.56 -0.19: AmTech downgrades Credence Systems (CMOS) to Hold from Buy, saying they are concerned about mkt share loss as checks in Asia suggest that the Octet tester may have recently lost some bookings momentum after some sizable orders placed late last year.
10:12AM CREE may see pricing pressure - Soundview 24.34 +0.34: Schwab Soundview reiterates their Underperform rating and $15 target on Cree; after discussions last week with CREE mgmt as well as H.B. L.E.D. supply chain contacts in Taiwan, firm remains convinced that Cree will experience significant avg selling price pressure as the year progresses; firm says the co's belief that wireless will drive revs for the next two years is overly optimistic given the massive supply entering the mkt, as CREE's decision to participate in Taiwan, China, and South Korea effectively eliminates any IP barrier (if one existed).
9:50AM TTMI target raised to $30 at Needham 17.85 +0.61: Needham reiterates their Strong Buy rating on TTM Tech (TTMI), raises their 2004-05 ests, and raises their target to $30 from $23; firm says demand for its broad assortment of board technologies continues to be strong (especially high layer count volume boards) and capacity is being increased.
11:31AM Nvidia (NVDA) 23.35 +0.05 Nvidia published Q4 results last week. The provider of graphics chips and visual computing solutions printed EPS of $0.14 on revenue of $472.119MM (+0.7% Y/Y) vs. consensus at $0.11 on $487.35MM.
Core products increased 20% Q/Q, driven by across the board strength in the desktop and notebook segments, more than offsetting the $90MM Q/Q drop in X-Box sales.
Gross margin declined 645 bps Y/Y to 29.3% but improved Q/Q. Operating margin declined 1004 bps Y/Y to 5.0% on higher R&D expense and as the company ramped marketing expense in support of product launches including the NV4x family.
Guided for Q1 revenue to be flat to down 5%. Gross margin is expected to come in at or above 30%. Operating expenses are expected to increase at least 5% on higher R&D and marketing to support new products. Q1 consensus is at $0.10 on $462.43MM (+14.2% Y/Y). F05 consensus is at $0.68 on $2016.37MM (+10.6% Y/Y).
Q4 results reflect NVDA's on-going battle with competitor ATI Technologies (ATYT 16.26 +0.24) for market leadership. Management is stabilizing the company's competitive position and shares are approaching an attractive price point. Based on our inverted EVA / DCF model, NVDA shares are priced for sustained high teens growth assuming steady Y/Y improvement to 20% operating margin.
We think NVDA can achieve revenue growth and margins above the rates implied by our model. Strong demand for core products, new product introductions and design win momentum support NVDA growing sales above the rate implied in our model. Additionally, a benign pricing environment (flat to up) and transition to advance process environments at foundry partners International Business Machines (IBM 99.76 +0.05) and Taiwan Semiconductor Mfrg (TSM 10.73 +0.10) provide NVDA with a firm foundation to expand margins.
Nevertheless, we would wait for a 8-13% pull-back or until total sales accelerate into the low teens before initiating a new position given that concerns over eroding market share continues to weigh on shares. We would accumulate ATYT.--Ping Yu, Briefing.com
10:41AM Silicon Laboratories (SLAB) 56.91: Morgan Stanley downgrades SLAB to Equal-Weight from Overweight based on valuation, as the stock is now trading at a slight premium to some of the best companies under coverage, and the potential for a more noisy competitive environment in the wireless market, suggesting additional multiple expansion will be difficult to sustain. Maintains $65 target.
What It Means:
At Morgan Stanley, an Equal-Weight rating reflects the analyst's expectation for the stock's total return to be in-line with the average total return of the analyst's industry coverage universe, on a risk-adjusted basis, over the next 12-18 months.
The downgrade highlights valuation concerns, which have plagued the market of late, particularly the technology sectors. As a result, today's downgrade, especially coming from a top-tier firm such as Morgan Stanley, is likely to pressure the stock in today's session.
This is the first downgrade of the stock since early December versus as many as 6 upgrades in the same period of time. Including today's ratings change, Multex shows the current ratings distribution having 4 analysts with an equivalent of a Buy rating, 4 analysts with an equivalent of an Outperform rating, 3 analysts with an equivalent of a Hold rating, and 1 analyst with an equivalent of a Sell rating, leaving plenty of room for further downgrades.
Despite the downgrade, the firm says execution and earnings results should remain solid, as SLAB continues to be a solid long-term growth story. While the firm expects near-term earnings upside surprises to become smaller, says results should continue to have upside potential. Additionally, the price target of $65 reflects 14% upside potential from current levels. These factors are likely to mitigate the impact of the downgrade. -- Victoria Glikin, Briefing.com
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