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Updated: 02-Apr-04 12:28 ET Quick Search:
Today's In Play
12:22 Treasuries spanked on explosive jobs data
The markets took one (early) look at the 308K nonfarm number and buried the market. The early "leak" saw ten-year futures fall to 112-08 at 8:30 ET from 114-08 at 8:28 ET, with bewildered traders everywhere asking what happened. The early posting of the enormous jobs growth data was given added substance by the revisions of the previous 2 releases, to 159K from 97K in January and to 46K from 21K for February. Options saw the implied volatilities get smoked, with nearby May dropping from 8.6% to 7.5% and there has been continued selling with size being offered in the May 10-year straddles (selling an equivalent number of the nearby at-the-money strike puts and calls) as well as June 5-year at-the-money straddles. As we noted in a recent Bond Column entitled "Informally Informed," traders had been looking for numbers significantly higher than those predicted by economists, but very few had set their sights anywhere near 308K. The day should see continued trade near the lows and stuck between 4.1% and 4.155% with a late day push through to new lows as players position for next week's shortened "holy week." Next week has Passover Tuesday, an early bond close Thursday and a full close Friday. Europe will essentially be closed through the week. The ten-years are currently -2 07/32nds yielding 4.155%; twos are -16/32nds yielding 1.878%; threes are -26/32nds yielding 2.284%; fives are -1 12/32nds yielding 3.144%; thirties are -2 31/32nds yielding 4.992%.
12:16 TYC Judge declares mistrial in Tyco case - Dow Jones (29.43 +0.64)
12:09 PSBI PSB Bancorp, Inc intends to appeal Court decision (10.28 -0.07)
Co announced that on 3/31 a U.S. District court granted the plaintiffs' motion for summary judgment in an action in which the plaintiffs seek to have certain stock options to be declared valid and enforceable. PSB will appeal the court's decision. If, on appeal, the motion is upheld, the aggregate number of shares underlying co's outstanding stock options would increase from 285K shares to 1.17 mln shares.
12:05 RIMM Volume Alert -- Research In Motion spikes intraday amid a surge in volume (99.38 +3.62)
Stock jumped almost 2 pts over a 5 min period.
11:50 TMWD Tumbleweed Comm strength attributed to rumor SYMC will make a bid for company (7.59 +0.50)
11:47 ISNS Image Sensing Systems: Possible trade on FBI bulletin (12.85 -0.43)
We consider ISNS a possible trade on FBI bulletin warning of attacks on buses and trains (see 11:34 comment). The company develops video vehicle detection systems for traffic management and control applications. The Autoscope vehicle detection system is used for advanced traffic management systems for highways, tunnel incident detection, intersection control, and traffic data collection. The company recently was selected for a new state-of-the-art traffic management system currently being built in Athens, Greece to accommodate the 2004 Olympic Games and replace its aging infrastructure. The contract was awarded after its Autoscope system proved to be the best video detection system. The co is installing cameras along major highways and intersections throughout the city of Athens and their video will be transmitted via fiber optic cable to one of the two new traffic management centers.
11:42 HITK Hi-Tech Pharmacal Co. nears resistance at 50 day ema of 21.79 (21.75 +1.65) -- Technical --
Next resistance of importance, if able to sustain a break, is at 22 which marks the bottom of the March 11 gap.
11:42 DIS Loop gives favorable review of Walt Disney outlook
Loop Capital states Disney CEO Michael Eisner, speaking at an investor conference yesterday, said that the co's businesses are operating "pretty much" in line with its expectations. Firm believes investors can get ready for a good quarter, as Eisner essentially reiterates guidance. Eisner says DIS' businesses are operating in line with expectations, with momentum continuing in the parks and a slate of new movies on the way. Parks & Resorts chief Jay Rasulo echoed Eisner's remarks, stating that DIS has not seen any impact on bookings from the bombing in Spain that would change its expectations. Separately, Eisner said he is happy to have given up his Chairmanship and says he never realized how much work it was. That time can now be allocated to running the company, which firm views as positive.
11:35 BMC BMC Software nearing early session and March high of 20 (19.96 +0.43) -- Technical --
11:34 FBI issues bulletin warning of attacks on buses and trains-- NBC
In one of the most specific terrorist alerts to date, the FBI has issued a bulletin to law enforcement agencies around the nation warning of an alleged plot against buses and railways in major U.S. cities this summer, sources told NBC News on Friday
11:28 BOBJ Business Objects: Product development issues persist -- UBS (30.60 +0.57)
UBS understands that an Enterprise 6.1b is to be released to fix a number of bugs persisting in 6.1a (itself a corrective release for 6.1). Not only does this likely put pressure on the 6.5 release timetable (due May '04), but also on the timely delivery of an integrated product - Bus.Objects 11 (due Q4 '04). UBS believes customers remain uncertain of the best migration path to Bus. Obj 11/12. Until clarity on the optimum path emerges, firm thinks sales activity will suffer. New win rates w/ E6 vs Cognos's ReportNet may also suffer. These considerations, together with the potential slippage of Bus. Objects 11, lead firm to trim FY04 estimates (US$1.04 from US$1.15). UBS thinks cautious guidance for Q1'04 should allow co to meet expectations here, but prospects further out seem more uncertain. Firm maintains Neutral rating.
11:25 Reuters blames defective clock for jobs report time stamp on Yahoo -- DJ
11:15 Research Call of the Week
Briefing.com's Research Call of the Week award goes to UBS, which on March 25 insisted that the weakness in Best Buy (BBY) shares was overdone, calling it an attractive entry point ahead of the co's Q4 earnings report. As many readers probably recall, the chatter regarding Best Buy's quarter was negative all the way up the minute of the earnings report with several firms lowering their estimates and WSJ running a story saying company could guide down. UBS on the other hand noted that these concerns were misplaced and believed that positive catalysts in the Best Buy story would become more apparent when the co reported. On March 31 Best Buy reported strong results, exceeding consensus and guiding up for Q1, resulting in a close to 7% jump in stock price. Investors taking cue from the UBS call on March 25 made a healthy 10% return in 5 days.
11:08 SUNW Sun Microsystems; gaps higher, pauses near 50 day sma at 4.94 (4.91 +0.72) -- Update -- -- Technical --
10:51 CRDN Ceradyne probing March high again (38.91 +1.06) -- Technical --
Stock ran to resistance at its March high of 38.99 (session high 39.00) in early trade and pulled back modestly. In recent action it has edged back toward this area again with the next resistance, if follow through develops, at late Feb high of 39.71.
10:51 IPIX -- Momentum crowd jumps into name for another ride (5.47 +1.47)
10:48 Dow Winners/Losers
Dow Winners: BA +2.47%, DD +2.47%, MSFT +2.31%, CAT +2.27%, AA +1.79%... Dow Losers: HD -1.37%, C -0.93%, JPM -0.90%, GM -0.83%
10:46 Barrington Research comments on Payrolls data
Barrington Research comments that payroll jobs surged by 308,000 in March, nearly triple the consensus forecast and well above the most ambitious of guesses. Job growth for Jan and Feb were also revised substantially higher. Since investor expectations reflect consensus guesses and the media, the report has to be treated as a positive surprise, which should be at least initially greeted with stronger stock prices. However, looking at the many employment related reports firm has been commenting on for months -- unemployment claims, regional Fed surveys, purchasing manager surveys, the Manpower survey and many others -- the jump in payroll jobs should have been one of the smallest surprises of the year. There has also been a substantial divergence between the more negative payroll survey and the much more positive household survey, which in the long run tend to converge. The recent strength in the stock market, which firm has indicated might have been in the initial process of breaking out of the two-month correction, was obviously discounting a better job report. Once the euphoria fades, moreover, investors may then start worrying whether the stronger job report may prompt the Fed toward an earlier than expected increase in rates, especially in light of rising commodity prices and recent warnings from Fed officials.
10:40 NTES Netease.com demonstrates relative strength, surges to best levels of day (52.83 +1.95)
10:33 SY Sybase nears support at 200 ema at 19.03 (19.08 -1.80) -- Update -- -- Technical --
10:31 RETK Retek: Bear Stearns makes trading call on name (7.75 +0.10)
While firm isn't expecting upside in its 1Q report, Bear Stearn senses there may be a short-term trade in RETK in front of the Q given: 1) a pullback in its stock (down 36% from highs in Jan); 2) a more attractive valuation (trading at 1.6x EV/Sales vs. a C04 range of 1.4x-2.9x & an avg of 2.1x); & 3) a pipeline of large deals (which have acted as a catalyst for the stock in the past).
10:29 SUNW Sun Microsystems +14% pushes out to best levels of day as broader market retreats (4.80 +0.61) -- Update --
10:28 ASKJ Volume Alert -- Ask Jeeves moves aggressively to lows of day (36.41 -1.03)
10:26 CFS Small Cap Profile -- Comforce (2.08 -0.08)
Monster Worldwide (MNST +6%) is ramping on the strong jobs report this morning. A stock we see as a secondary play, and which we profiled yesterday at $1.80 on our Small Cap Focus page in anticipation of a strong jobs report, is Comforce, which provides specialty staffing, consulting and outsourcing services primarily to Fortune 500 companies. It is an interesting small cap name in the labor sector that remains relatively undiscovered given its sub-$50 mln market cap. It benefits from a strong labor market as it indicates companies are more willing to spend on labor. The company is emerging from a difficult period, but has been able to lower its debt level considerably.
10:24 DPMI Dupont Photomask: near term photomask market demand remains muted -- Amtech (23.75 +0.60)
Amtech's checks indicate that near term photomask market demand remains muted. Firm expects DPMI to meet Amtech's revenue estimate of $82.5mln. While expecting seasonally improved sales growth beginning in the June quarter, the potential catalyst for better than seasonal growth is not likely to occur until late 2004. DPMI's breakeven point of just above $100mln is not likely to be achieved until March 2005. Amtech maintains its HOLD rating on stock
10:17 NXTL Nextel: Color on Price Weakness (23.92 -0.30) -- Update --
Have checked with several desks on reason for NXTL weakness over the past two days. We are hearing several items: 1) WSJ article regarding Mexican wireless operators America Movil SA and Grupo Iusacell SA studying the viability of entering the push-to-talk market, 2) rumor that co will bid to acquire the remainder of Nextel Partners (NXTP 13.53 +0.23, +1.7%), 3) chatter that analysts' net sub addition numbers may need to come down.
10:10 XMSR XM Satellite downgrade details (29.97 +1.63) -- Update --
Stifel Nicolaus downgrades XMSR to Mkt Perform from Outperform; while the co handily beat Street ests for Q1 subscribers, firm believes the stock could pull back amidst a lack of new news as well as their expectations of mkt share improvements by SIRI. Firm believes that SIRI now offers the best risk/reward, as they think upside in the qtr is coming from the retail distribution channel; firm maintains their $4.25 target on SIRI, but sees realistic scenarios where SIRI could reach $5-$7 within 2 years.
10:09 SIRI slips in sympathy with XMSR downgrade; however, Stifel pts out that SIRI now offers the best risk/reward (3.55 +0.09)
10:05 XMSR XM Satellite cut to Mkt Perform at Stifel (30.46 +2.12) -- Update --
...
10:04 COMPX Nasdaq Composite pauses at resistance (2048 +32.90) -- Technical --
Impressive gap higher opening sees the index run to resistance mentioned in The Technical Take in the 2055/2058 area (62% retrace of Jan/March slide, congest) before turning lower. Initial intraday support at 2045/2040 has held thus far (secondary level at 2034/2032) with a continued posture above these barriers leaving the door open for an upside extension. Next resistances are at the early March highs of 2064 and 2069.
10:01 EPAX Ambassadors Group cut to Underperform from Neutral at D.A. Davidson (25.55 +0.41)
As Ambassadors Group has executed on its business plan during a difficult environment for it travel programs, the share price has doubled in the past year. Now, with the stock priced at 18.7x this year's earnings estimate of $1.35, firm views the shares fully valued.
09:52 DRS DRS Tech inks Army contract valued at more than $375 mln (28.59 +0.33)
Co announces that it has been awarded a five-year U.S. Army contract to produce a family of next-generation Thermal Weapon Sights for war fighters. The contract, with a base value of $118 million, could exceed $375 million, if all options are exercised.
09:51 NXTL Relative Weakness: Nextel sets new four month low (23.90 -0.32) -- Technical --
09:50 EELN -4.8% also pressured by spike in rates following today's Jobs data
09:49 RATE Bankrate gives up some of recent gains as 10-yr yield jumps back above 4% (19.36 +0.94)
09:47 ZMH Zimmer Hldgs upped to Buy from Neutral at First Albany (77.32 +3.37) -- Update --
First Albany is raising rating on Zimmer to Buy from Neutral, maintains price target of $84.50, after co preannounced strong Q1(Mar) revenue results and stated that EPS should significantly exceed consensus estimates. Firm would expect 2004 and 2005 revenue and EPS expectations to increase significantly post the Q1 earnings results conference call. Price target is based on 40x firms FY04 EPS estimate of $2.12 and 20x firms FY04 EBITDA est of $991.4 mln; forward expectations could be raised, which would result in an increase to price target. Firm is assigning a higher multiple to valuation due to stellar growth rates and industry multiple expansion. However, firm points out that currencies have been beneficial, and should the dollar strengthen, industry multiples could contract.
09:45 Homebuilders and Mortgage Lenders sharply lower as interest rates surge, 10-yr -1 26/32, yield 4.108%
09:44 Sector Watch: Housing -HGX -1.3%- under pressure as yields soar
09:43 APOL Apollo Group shows relative weakness in early trade (88.58 -0.56)
09:43 Waiver of the Oxygenate Mandate: What Does It Mean? -- Bear Stearns
Bear Stearns says that reports of a request by three states for a waiver of the Oxygenate Mandate in gasoline sent prices sharply lower yesterday afternoon. Firm says high gasoline prices have become a political issue, given that this is an election yr. Firm expects the Bush administration to take some action to alleviate upward pressure on gasoline prices. If action is take, firm believes gasoline prices are likely to fall, and currently high gasoline margins particularly on the East and West Coasts would also decline. The implications for Independent Refiners is negative in firm's opinion. Among the major oils, firm believes results from Amerada Hess (AHC -0.58) and ConocoPhillips (COP +0.29) would be most negatively affected.
09:41 HDTV Spatialight: Hearing rumor Intel will bid for co, as it attempts to go after LCOS mkt for high-def TV (3.90 +0.20)
09:39 ADP Automatic Data upgraded at Raymond James (43.51 +1.37)
Raymond James upgrades ADP to Strong Buy from Mkt Perform given the stronger than expected employment numbers released this morning coupled with improving key indicators for the business. Target is $49.
09:37 NVDA NVIDIA removed from Focus List at Wedbush (26.60 +0.67)
Wedbush Morgan removes NVDA from their Focus List based on valuation, as the stock is near their $28 target, and with the stock trading at 1.6x their CY05 EV/Sales est, has closed the valuation gap with ATYT. Maintains Buy rating.
09:36 IPAS expected to beat Q1 estimates -- Thomas Weisel (10.80 +0.29)
Thomas Weisel expects iPass to meet/beat the firm's and consensus Q1 estimates when the co reports April 22 as market demand for connectivity solutions remains strong especially as rollouts of broadband accelerate. The firm says business is healthy. Checks indicate that iPass' pipeline is looking stronger than 3-6 months ago and renewals have been healthy as well. The firm has heard of a few large deals that the company closed in MarQ. On the other hand it also heard about a couple of deals that the company lost to Fiberlink (private competitor of iPass).... Briefing.com Note: IPAS is a recent IPO which has been falling steadily since Oct to a new 52-week low yesterday.
09:35 LAVA Magma Design: Color on yesterday's weakness (21.74 +1.52) -- Update --
Several firms out in defense of Magma following yesterday's fall amid speculations that the co may not have met the bookings guidance for the MarQ of $70-90 mln. RBC Capital upgraded the shares (see 07:26 comment) to Outperform from Sector Perform noting they believe that Q4 results will be within guidance for revenue, EPS, and bookings. They also believe several large deals remain in the pipeline, and that any orders that did not close in Q4 are not lost, but delayed. Also, Wells Fargo out saying they do not believe that these speculations are substantiated by any credible source and remain confident that the company should meet its top-line guidance of $32-34 million and pro forma EPS guidance of $0.15-0.19. [Briefing.com note: Although there are firm out in defense of LAVA this morning, one should not that peer Verisity (VRST -5.8%) issued a negative pre-announcement for the current quarter.]
09:27 PXLW Next Generation Research starts PXLW with a BUY and $20 tgt (17.26 )
Next Generation Equity Research is initiating coverage of Pixelworks with a Buy rating and price target of $20. The firm notes PXLW has a dominant share in system on chip solutions for projectors at 85% and its increasing market share in digital TVs with the Photopia roll out while exiting low margin monitor business. The firm notes the co trades at valuations that are a slight premium to its peers in the digital media/semiconductor industry, but believes the co merits higher valuations because of better margins and less exposure to pricing pressures in the desktop monitor business. The 12-month price target of $20 is based on 5-6x price to sales and price to book and 50x FY04 EPS of $0.40.
09:23 Gold, Oil and Dollar Summary
The Dollar surges higher against the Euro (1.2175) and Yen (104.47) after better-than-expected employment data showed the economic recovery is still alive...Gold drops almost 11 points to 419 after piercing its January high (431.50) yesterday. The new high stands at 433 an ounce. Gold has made an incredible 11% run since its March 3 low at 388 on geo-political unrest and rising strength in the Yen...Oil (34.15) is attempting to stabilize after dropping 1.50 points yesterday. From a technical perspective, oil has broken its uptrend from its September low and slipped below its February breakout above 35.00.
09:16 Market already talking up outlook for a Bush re-election after jobs data; a Republican White House is seen as positive for Pharma stocks
09:15 S&P futures vs fair value: +12.3. Nasdaq futures vs fair value: +27.0.
Futures indications continue to tick higher into the start of regular session trading, and point to a substantially higher open... Along with the upside surprise in the March employment report, the 31% increase in global sales of chips has contributed to the upbeat mood in trading... As a result, tech should be one of the strongest groups in the early trade.
09:12 SGMS Scientific Games: Roth raises tgt to $25 from $20, reiterates Buy rating (20.00 )
Roth Capital reiterates their Buy rating on Scientific Games and raises their target to $25 from $20; firm says the co's analyst day confirmed their view that instant ticket and online lotteries serve as key growth catalysts for the next several years, and they believe that int'l instant ticket contracts present upside to their ests.
09:04 JP Morgan recommends basket of Semi Equipment stock
JP Morgan out positive on select semi equipment stocks. In line with their bullish thesis on the sector, they recommend the following basket of stocks, some of which are currently exhibiting leadership within the group with 50-day MA breakouts to the upside: BRKS, CYMI, MKSI, MTSN, and PLAB. According to the firm, these represent a broad and regional spread with Brooks being the largest player in the above-average growth automation segment, Cymer the dominant supplier in lasers for lithography, MKS the leading sub-system supplier and proxy to large OEMs, Mattson gaining share in Strip and RTP, and Photronics a proxy for accelerating chip design activity with strong leverage. All five of these companies are executing well this cycle and the firm expects them all to deliver in line or better results with upbeat forward guidance as they report the first calendar quarter.
09:03 QCOM Qualcomm estimates raised at Merrill (66.29 )
Merrill Lynch raising 2004-2005 EPS estimates and target on Qualcomm, based on introduction of WCDMA estimates and strong demand for CDMA handsets. The firm is raising 2004 EPS esti from $1.76 to $1.78 and for 2005 from $1.85 to $1.96 as they now assume a 7% WDCMA penetration in 2005 representing 36 mln handsets in Japan and W. Europe based on statements from the leading operator, Vodafone, and capex guidance of other operators suggest that the technology is rapidly becoming a certainty. Price tgt goes to $75 from $65. |
