briefing.com has positive remarks on cisco::
<Picture>Tech Stock Analysis
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Updated for: February 04, 1998
Please note: Briefing.com is provided as an information service only. Charter Media, Inc. and Briefing.com do not make specific trading recommendations or provide individualized investment advice. Readers should make investment decisions based on thorough research and their own investment criteria. See Disclaimer.
General Commentary
Non-believers have to be getting nervous, as tech sector continued its upward march... Techs received another big boost from news that Morgan Stanley started coverage of the industry with a buy... Prudential also busy... Company started coverage of 7 chip stocks with buy ratings while adding Altera to its "Single Best Idea" list... Chip sector, which had already staged a dramatic recovery off its early year lows, added another 3.8%... Year-to-date the sector is up over 21%... Many analyst still see problems on the horizon, but clearly momentum investors are getting back on board... Recent rallies have not been kind to fence sitters and we expect this move to be just as rude... In other words, the bus is leaving town - get on board now or miss the ride.
After the close Cisco Systems reported its earnings... Company exceeded estimates by one cent in reporting a gain of $0.43... Revenues up 26.6%... More or less what the street expected... Should enable stock to resume rally... PeopleSoft also beat the street estimate... The company reported earnings of $0.16, two cents above consensus and 15 cents above year-ago levels... Given recent surprise history, this number shouldn't be too surprising, however... That said, market to be receptive to company's forecast that Q1 revenues will be up 75% from year-ago levels and that FY98 revenues should be up 50%-60%... We saw these reports as the only possible speed bumps (this week) on the road to new highs... But it looks like smooth sailing ahead... For a complete list of companies reporting earnings and the street's consensus estimates, see Briefing's Earnings Calendar.
Industry Updates
Computer Systems & Peripherals | Networking | Software | Semiconductor | Semiconductor Equip. | Telecom Equipment
Computer Systems & Peripherals
Brief: Though there was little news, price action remained decent... Disk drive group spent the session consolidating, but a couple of notable PC laggards finally joined the party... Most notable, was the 2 9/16 point gain by Compaq... First big gain since announcing acquisition of DEC... Given relatively attractive valuations, look for CPQ to follow other big name tech stocks to new high ground... Micron Electronics jumped 1 to 12 11/16 after Piper Jaffray upped the stock to accumulate from hold... Rating upgrade overshadowed news that PJ also cut FY98 estimates to $0.11 from $0.40... Other winners included Dell (+1 1/2), Digital (+1 15/16) and Gateway (+1 7/16)... Latter stock is up 70.8% off its November low... Next stop 46 1/4 (all-time high)... Hewlett-Packard (-1 1/2) and IBM (-1 3/16) continued to underperform... As noted on this page the other day, HWP nearing pivotal support at 57 1/2... Weakness related to earnings concerns and belief that company could be the big loser from the CPQ/DEC merger.
Computer Networking
Brief: Group held up exceptionally well in the face of an earnings warning from Newbridge Networks (-5 1/2)... Company warned that it would earn $0.07 for the quarter v. estimates for $0.24... Many firms downgraded the stock after the report... For details, see upgrades/downgrades... Cisco only other stock to post notable decline (-15/16) on some light profit-taking ahead of its earnings announcement... Those who took profits may be sorry, however, as company reported a better than expected gain of $0.43 on a 26.6% revenue jump... Featured here yesterday, Xylan shot up another 1 15/16 to 20 5/8 on news that BA Robertson Stephens upped its rating to buy from market perform... See near-term test of resistance in the 22-23 area... CS First Boston started coverage of 3Com with a hold.
Computer Software & Services
Brief: Briefing assigned group its highest near-term rating... For more, see Sector Ratings... Tuesday's session proved mixed, with Microsoft extending its rally by another point and rival Netscape jumping 1 5/16 on news of an alliance with Sybase... Yahoo! led the losers, shedding 1 5/32 in light profit-taking... After the close, PeopleSoft announced earnings of $0.16, two cents above estimates but in line with its recent surprise history... Company projects 75% jump in Q1 revenues and 50%-60% increase in FY98 sales... PSFT also announced that Boeing had selected company's software to standardize and streamline BA's human resources, payroll and benefits administration process... Stock poised for near-term run to the 47-48 range.
Semiconductor:
Brief: We're sounding like a broken record but this group just keeps on climbing... Up almost 4% in Tuesday's trading alone... Now the top performing S&P sector year-to-date... Group underpinned by news that Morgan Stanley started coverage with a buy rating... Prudential also initiated coverage of Intel (+3 1/4), LSI Logic (+1 13/16), Xilinx (+3/4), Lattice (+2 5/16), Exar (+1 1/4), Altera (+2 1/16) and Benchmark Electronics (+1/2) with buy ratings... Started Atmel (+11/16), Anadigics (+3/16) and Advanced Micro (-1/16) with hold ratings... Proving that it has nothing against the first letter of the alphabet, Prudential named Altera to "Single Best Idea" list... More good ratings news from BA Robertson Stephens and DLJ... Former started VLSI (+3/4) with l/t attractive rating... Latter upped its view on Intel to buy from market perform... Chip giant surged 3 1/4 and is now a few points from key resistance at 90... Break of this ceiling would position stock for test of its all-time high at 102... With industry up over 20% off its recent lows, look for continued near-term gains as fence-sitters jump in for fear of missing the complete run... One look at chart of sector shows that industry is prone to big swings in both directions... Pendulum back on the upswing... However, Asia could still come back to bite group in the backside particularly if either Hong Kong or China devalue their currencies.
Semiconductor Equipment
Brief: Strong performance by the chip sector, spilling over to the chip equipment group which posted across-the-board gains... Whereas earlier gains were led by Novellus (+2 3/8), Applied Materials (+3/16) and Teradyne (+2 3/8), now entire group on a roll... FSI International surged 1 1/16, Kulicke & Soffa rallied 1 3/4 (stock up 17.9% in two days) and Lam Research added 1 1/8... Market now believes bad news is old news... Asia's impact not that bad in Q4 and if crisis in the region doesn't get any worse over next month or so, group looks attractively valued at these discounted levels... As such, near-term outlook remains very promising.
Telecommunications Equipment
Brief: Group spent the day backing and filling, with most stock posting only fractional moves in either direction... Big exception - Lucent Technologies... Stock surged through key resistance at 90 3/4 and is now poised for run to the 100-105 range... Northern Telecom launched Enterprise Data Networks, a new business unit focused on delivering high-performance data networks.
[ Index ]
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