Here is an article about AMZN in "the Red Herring" about the recent upgrade from Robertsen Stephens......
redherring.com
ANALYST UPDATE: GETTING
THAT OLD, BULLISH
FEELING?
By Peter D. Henig
June 4, 1998
In a classic case of the shorts finally seeking their revenge
on the market's longs, technology stocks are still
struggling to find their happy place.
Intel (INTC) got cut off at the knees this past week as
Wall Street punished the chipmaker for delaying its new
Merced chip until the middle of 2000, while also making
it the scapegoat for flattening personal computer sales.
To make a bad situation worse, the Federal Trade
Commission's antitrust cops have made Intel their
whipping boy.
At the same time, analysts with BancAmerica Robertson
Stephens will not be denied their bullishness on Internet
stocks, even as Goldman Sachs discovers that while
there may not be oil, there just might be gold, in the
sands of Israel.
As Intel goes, so goes the market
Technology stocks were finally on the rebound. After a
multiday slide and a significant downside correction of
nearly 150 points on the Nasdaq, investors were finally
finding the chutzpah to reach back into their wallets and
buy technology stocks.
That is, until rumors swirled on Wednesday that Intel
might warn of a second-quarter shortfall, and analyst
Rob Chaplinsky of Hambrecht & Quist took the hatchet
to his earnings estimates, cutting second-quarter profit
estimates on the chipmaker to 65 cents from 69 cents a
share.
Citing soft demand for personal computers, Mr.
Chaplinsky also cut his 1998 estimate to $2.92 a share
from $3.04 and his 1999 forecast to $3.84 from $3.93.
Suddenly, the previous day's gains had disappeared into
sharp losses, causing the Nasdaq to drop like a
two-day-old potato knish, and the market to fret that the
only leadership would be to the downside.
Intel lost almost 5 percent in the single afternoon's trading
on Wednesday, only to make it up the next day after the
company denied there would be an earnings warning and
said that its guidance for the quarter remains unchanged.
Such is the power of a single analyst in today's nervous
environment. Yet, when it comes to Intel, investors are
particularly skittish, given the company's blindsiding the
market with an earnings warning during the first quarter
of this year. Intel also surprised the market by
announcing last week that it will delay the release of its
new high-end chip, dubbed the Merced, by at least six
months into the year 2000.
Scott Nirenberski, analyst with Deutsche Morgan
Grenfell, touched off the initial Intel hysteria after telling
his clients that the company might warn of a
second-quarter shortfall, even though he maintained his
Buy rating and chose to wait for guidance from the
company before cutting his own estimates.
Intel had already been hit with two previous downgrades
from BT Alex Brown and Cowen & Co., which lowered
ratings on the firm from Buy to Market Perform and Buy
to Neutral, respectively. Ironically, even after Intel came
out publicly to calm a panicked market, that didn't stop
Gruntal & Co. from cutting its own earnings estimates for
Intel Corp. while maintaining a Hold rating on stock.
Bullish on the Net, part deux
Don't tell analysts at BancAmerica (soon to be
BancBoston) Robertson Stephens that Internet stocks
have run out of gas. If Robbie Stephens Internet analyst
Keith Benjamin is right, they're just getting warmed up.
Mr. Benjamin bumped up Amazon.com (AMZN) to a
Buy from a Long-Term Attractive, while upgrading
SportsLine USA (SPLN) from a Buy to a Strong Buy.
Either Mr. Benjamin knows something the rest of us
don't, or he's married to last month's speculative rally,
which appears to have fizzled for the moment.
Mr. Benjamin does have his reasons. Writing in his
Weekly Web Report at Internetstocks.com Mr.
Benjamin cited recent price weakness, anticipation of
continued good fundamental news, and renewed interest
in the Internet stock sector as his basis for raising
Amazon.com to a Buy.
"We expect very strong year-over-year comparisons and
robust sequential growth (for Amazon)," he wrote.
Although Mr. Benjamin raised some concerns -- shared
by many analysts -- that Amazon's margins are thin as a
result of massive investments in marketing and
promotion, he now believes that Amazon's sales are
rising enough that Amazon can boost margins thanks to
volume discounts from publishers.
As a result, Mr. Benjamin concludes that "Amazon.com
will be able to demonstrate a slingshot effect of significant
profitability when it is able to scale back and stabilize
marketing spending." Mr. Benjamin raised his 2001 EPS
estimate to $1.75 with a new price target of $88.
Mr. Benjamin also raised his rating on Sportsline USA to
a Strong Buy based on what he says is a confusion over
whether the sports-oriented Web space is too crowded.
He says it's not. "Clearly, in our opinion, there are
enough people passionately interested in sports content
to support big audiences for multiple sites," wrote Mr.
Benjamin. "More importantly, we believe advertisers can
support rapid revenue growth for both SportsLine and
ESPN."
Mr. Benjamain concludes with these words: "We would
be very aggressive buyers of the stock on this confusion
... and believe the current confusion can be quickly
resolved by positive World Cup news and by a solid
June quarter report." Talk about bullish.
Meanwhile, back on planet Earth, Mr. Benjamin's
colleague at Robertson Stephens, Gary Craft, upgraded
electronic-commerce vendor Sterling Commerce (SE)
from Long Term Attractive to Buy based primarily on the
fact that Sterling had been trading too much like an
Internet stock. Although most investors would have
considered this a change for the better, Mr. Craft felt that
the stock had been unduly punished when the Internet
sector came under its most current price pressure.
"Investors were penalizing (Sterling), whose
fundamentals did not rely on the Internet, but rather were
simply enhanced as a result of the Internet," said Mr.
Craft. Noting that Sterling's shares were trading at a
highly attractive 22 times calendar 1999 EPS estimates,
Mr. Craft loaded the gun and pulled the trigger.
"It has rallied nicely since our upgrade to Buy, just like
the play book says a stock should act after a stock rating
upgrade," he said. Sounds like a soundbite for Mr.
Benjamin's SportsLine USA.
Covering the Holy Land
And talk about picking up coverage of a new sector,
Elan Zivotofsky, analyst with Goldman Sachs, has
initiated coverage of an entire country.
Goldman Sachs announced Tuesday that it was
beginning coverage of seven Israeli technology stocks,
including: Gilat Satellite Networks (GILTF), Check Point
Software (CHKPF), Memco Software (MEMCF),
New Dimension Software (DDDDF), Nice Systems
(NICEY), Elron Electronics Industries (ELRNF) and
Teledata Communications Limited (TLDCF).
Memco Software and New Dimension Software were
added to Goldman's U.S. and Emerging Europe
recommended lists, while the others were started with
Market Outperform ratings.
Mr. Zivotofsky, who is located in Israel, said in a recent
report that he views current weakness in Memco's stock
as an excellent buying opportunity. Similar to Check
Point Software, Memco is also a global leader in data
security. Mr. Zivotofsky forecasts a 12-month price
target of $35, implying a 55 percent appreciation
potential
Regarding New Dimension Software, a developer of
management software for mainframes and distributed
systems, Mr. Zivotofsky believes the firm "is still being
judged on past management and financial problems ...
even though the company has engineered a successful
turnaround, which has not yet been fully recognized by
investors.''
Mr. Zivotofsky has set a 12-month price target of $37,
against the current a current price of 28.25.
Read our take on Intel founder and "lawgiver" Gordon Moore.
Amazon.com CEO Jeff Bezos convinced us a while back that he
would change the way books were sold.
Is Deb Triant, CEO of Check Point Software, ahead of the
curve?
Are you bear, bull, or hog? Offer us some feedback. |
