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From Briefing.com: 4:17PM Weekly Wrap: The stock market rally came to a halt this past week amidst very choppy action. The fundamentals remain good, however, and the underlying tone modestly upbeat.

The stock market reacted to technical factors most of the week rather than data. On Monday, the S&P dropped 11 points. There was little news to account for this but some profit-taking after a five-week rally was fully understandable. In fact, there was good news in a sharp drop in oil prices, but the market has become somewhat disengaged from short-term swings in that commodity.

On Tuesday, the market was flat, but the selling picked up again on Wednesday. The S&P lost 8 points that day on what appeared to be some positioning for tax purposes on the final day of the month. Again, the news was mixed at worst and oil prices were lower.

Then on Thursday, the S&P rocketed 15 points higher. This probably reflected some unwinding of the selling the day before. Oil prices that day were up. Friday the indices traded in a narrow range and were little changed.

A key theme this week was strength in the economic data. It is now clear that the US economy has handled the shock from hurricanes Katrina and Rita quite well.

Third quarter real GDP was revised upward to show a very good 4.3% annual growth rate from a previously reported 3.8%. Consumer confidence in November jumped sharply higher. November sales from retail chains showed solid growth over last year. Durable goods new orders were up sharply. Existing home sales dipped, but new home sales surged to a record level. And November nonfarm payrolls rose a stronger than expected 215,000.

These releases had little impact on a daily basis as the stock market went through its internal gyrations. None show convincingly that the economy is booming. Yet, in aggregate, the picture is clear - the economy is still growing above its long-term growth trend. There is broad strength across consumer spending, business investment, manufacturing, and employment.

The data put to rest concerns about a significant slowdown in the economy in the fourth quarter.

That doesn't necessarily eliminate all the worries for the stock market. Inflation is a key concern. If it picks up, the Federal Reserve will keep raising interest rates into the first quarter of next year. That would limit stock market gains. The strong economic data do, however, lay the foundation for the positive underlying stock market tone to continue through year-end.

Not too much emphasis should be placed on the aberrant choppy action this past week. The momentum has stalled but the fundamentals have not changed.

 
 Index      Started Week  Ended Week  Change  %Change  YTD  
 DJIA         10931.62     10877.51   -54.11   -0.5 %  0.9 %  
 Nasdaq        2263.02      2273.37    10.35    0.5 %  4.5 %  
 S&P 500       1268.25      1265.08    -3.17   -0.2 %  4.4 %  
 Russell 2000   683.60       689.81     6.21    0.9 %  5.9 %

10:33AM Walgreen Co. (WAG)

46.69 +0.58: Walgreen Co., the nation's largest drugstore chain, on Friday reported a 7.8% increase in November same-store sales, or sales at stores open at least a year, helped by strength in both pharmacy and merchandise sales. The results beat the Briefing.com consensus estimate of 7%.

The company, headquartered in Deerfield, IL, said sales during the month increased 11.1% to $3.75 billion, while pharmacy sales, which accounted for 63.2% of total sales, climbed 10.5%. Comparable front-end, or general merchandise, sales rose 8% from a year ago. The retailer noted, however, that all comparable sales exclude stores still closed from the impact of Hurricane Katrina, which devastated the Gulf Coast last September and consequently disrupted business operations.

For perspective, rival CVS Corp. (CVS) on Thursday said that same-store sales for November increased 7%, versus the Briefing.com consensus of 6.4%, driven by improvements in both front-end and pharmacy sales. Overall sales totaled $2.9 billion, a 9.3% increase from $2.6 billion a year earlier. Pharmacy sales, which increased 6.1% despite the adverse impact of higher generic drug penetration, accounted for approximately 70.1% of its November sales.

Consistent with its better-than-expected sales report, Walgreen's outlook remains bright. Even with increased customer preference for generic drugs, which sport higher margins and lower prices, Walgreen continues to demonstrate meaningful top-line growth. Along with store expansion efforts, the company has actively invested in in-store technology and customer service initiatives to support continued growth. While rival CVS has also demonstrated progress, Walgreen's continues to be the predominant leader. At the current price level, shares of the company trade at 22.9x forward earnings.

--Richard Jahnke, Briefing.com

9:16AM Ford (F)

8.10: According to The Wall Street Journal, it appears management's latest efforts to align plants and thousands of employees to the market will result in the possible closing of five plants. Ford Motor has 20 assembly operations in North America, but the article indicates the doors at the assembly plants in Atlanta, St. Louis and the Twin Cities (Minnesota) could possibly be closed.

Shutting down the plant in Atlanta would be a surprise, but considering it has specialized in the manufacturing of the now-discontinued Ford Taurus wouldn't make such a move too much of a shocker. The Taurus was the best-selling car in the U.S. from 1992 to 1996, but it has since been replaced by the Ford Fusion, which to management's dismay has been slow to gain sales momentum. On Thursday the nation's second-largest auto maker reported the worst monthly sales figures in the industry, citing a 15% decline in November U.S. sales before cutting production targets for both Q405 and Q106.

Crossing the borders, the aforementioned article further suggest that two other facilities - an engine-parts plant in Windsor, Ontario, and a truck-assembly plant in Cuautitlan, Mexico - could also be shuttered. In total, the five plants employ roughly 7,500 workers, or about 6% of Ford's total North American work force. While these plant closing could help Ford cut costs, we maintain the view that there is still no compelling argument for owning shares of Ford at this juncture.

Brian Duhn, Briefing.com

9:05AM OmniVision Technologies (OVTI)

18.25: Supported by strong demand for mobile handsets, OmniVision Technologies posted record earnings for its fiscal second quarter and issued favorable guidance for the current period. The Sunnyvale, CA-based company, which makes semiconductor image sensors for such products as digital cameras and video phones, reported earnings of $22.6 million, or $0.41 per share, up from $17.8 million, or $0.28 per share, in the prior year period. According to Reuters Estimates, analysts were expecting earnings of $0.31 per share.

For the latest quarter, revenue increased 50% year/year to $126.8 million, eclipsing the consensus estimate of $114.6 million. The company said strong demand from mobile handset manufacturers helped bolster its top-line, while a favorable product sales mix and better production yields helped improve margins. OmniVision's gross margin for the second quarter was 36.1%, compared to 33.3% last quarter.

In response to increased demand, namely from mobile handset manufacturers, OmniVision increased its inventories during the second quarter. At the end of the latest period, inventories were $71.1 million, compared to $61.4 million on July 31, 2005. The company said most of the increase was from work-in-progress and represented products that will become available for sale in the third quarter.

Looking to the current quarter, the company expects EPS in the range of $0.42 to $0.47 per share on revenue between $130 to $140 million. Analysts, on average, were looking for earnings of $0.33 per share on revenue of $118.11 million, according to Reuters Estimates.

As a result of the better-than-expected report, shares of OmniVision have surged in pre-market trading, gaining more than 18%. The stock has climbed 55% since scraping a 52-week low in the month of October and is up approximately 3% year-to-date. At the current price level, shares are trading at about 14.5x forward earnings - a relative bargain compared to its peer group considering analysts' growth estimates. Given the strong demand within the consumer electronics market, as discussed in Briefing.com's Overweight rating on the Technology sector, OmniVision appears poised to continue to outperform.

--Richard Jahnke, Briefing.com

6:34AM Starbucks (SBUX)

31.14: There is just no denying that coffee, espresso, and latte drinkers love their Starbucks. That much was evident in the latest sales update from the company in which it was reported same-store sales rose 7.0% for the four weeks ended Nov. 27. Alone, the 7.0% figure doesn't say much; however, when taking into account that it came on top of a 13.0% increase in the year-ago period and easily eclipsed Street expectations calling for a 4.4% gain, it goes to show that Starbucks knows both what its customers want and how to deliver it. The strong performance by Starbucks also goes to show that high energy prices still aren't acting as a meaningful spending deterrent for Starbucks patrons.

According to the company, handcrafted espresso beverages, as well as core and holiday offerings (think eggnog latte), were the leading contributors to the strong November results that were accented by a 22% increase in consolidated net revenues to $593 million.

As one might presume, the better than expected same-store sales results provided SBUX with a boost in Thursday's after hours session. The company's stock, incidentally, has been on a tear since hitting an interim low of 23.06 on Sept. 21. That surge has coincided with the drop in gasoline prices, a reassuring fiscal Q4 earnings report from the company, and a string of impressive same-store sales results (Sept. +10.0%; Oct. +7.0%) that continued with the November report. The rate of same-store sales growth at Starbucks may not be as heady as it once was, but nonetheless, the company's unceasing ability to top expectations will keep its stock in good standing with the market.

--Patrick J. O'Hare, Briefing.com

9:57AM MGM Mirage (MGM) Susquehanna Financial downgrades Positive to NEUTRAL. Firm has become more cautious on its growth prospects in the nearly four years prior to the opening of City Center in late 2009. Firm does not see meaningful growth without significant capital spending to drive EBITDA. Longer term, the co could possibly develop another Macau casino, win a license in Singapore, or possibly develop a casino on its Atlantic City land. While all of these projects could provide upside to shares, none of them are certain enough to impact valuation at this point.
9:56AM Total System (TSS) AG Edwards upgrades Hold to BUY. Target $28. Firm is saying free-cash flow generation will likely exceed net income for the foreseeable future. With strong earnings visibility and a debtfree balance sheet the firm believes, at current prices, the shares are attractively valued with favorable risk/reward profile.

9:56AM U.S. Steel (X) UBS downgrades Neutral to REDUCE . The firm says the acquisistion tgt speculation is overdone in their opinion says U.S steel was the world's 7th largest producer in 2004 and they do not envision the larger companies are interested with making that size of an acquisistion. The firm lowered natural gas price assumptions to reflect a warmer winter so far, and raised their 2006 earnings multiple. This yields a $45/sare tgt vs. a prior $41, but the firm says it is still not high enough for them to hold the stock at current levels.

9:55AM Frontier Oil (FTO) CSFB upgrades Underperform to NEUTRAL. Upgrade follows the co outlining a combination of organic brownfield investments and an increased return of capital, which firm views positively. Firm also cites FTO's above average complex refining system and relative valuation.

9:54AM GB&T Bancshares (GBTB) Sun Trust Rbsn Humphrey initiates NEUTRAL. Firm says it would be buyers of the stock on weakness. Of note, SunTrust says there is some takeover premium already in GBTB shares, given the Atlanta area remains one of the most attractive banking markets in the country. Firm says that potential acquirers in the Atlanta market include: Fifth Third Bancorp (FITB), Colonial BancGroup (CNB), Royal Bank of Canada (RY), BB&T Corporation (BBT), and Synovus Financial Corp (SNV).

9:54AM Vishay (VSH) KeyBanc Capital Mkts / McDonald upgrades Buy to AGGRESSIVE BUY. Firm is citing their strong confidence in the solid demand for VSH's products, that appears more cyclical and sustainable. The firm says in recent proprietary conversations, they continue to hear that VSH's strong book-to-bill is broad based. The firm says with very strong bookings from 3Q05 through Nov, stetching lead times, price stability and strong operating leverage, we expect 4Q05 and 1H06 results may be better than expected.

9:53AM SFBC Intl (SFCC) Robert W. Baird upgrades Neutral to OUTPERFORM. Target $27 to $22. Upgrade follows yesterday's 26% sell-off resulting from disclosure of Miami facility structural issues and temporary Phase I capacity reduction. While the impact of this news and damage to co reputation following Bloomberg articles is impossible to estimate, firm believes that valuation is attractive and more than offsets increased risk.

9:50AM Abbott Labs (ABT) UBS upgrades Reduce to NEUTRAL. Upgrade is based on valuation. The firm says they remain cautious on the stock given ABT's near-term outlook. The firm says ABT is facing several challenges in its businesses, particularly in pharma, saying outside of Humira the pipeline appears weak. Firm says while ABT has initiated a cost reduction program, the firm believes the actions will not result in better than expected earnings.

9:49AM Salesforce.com (CRM) Prudential downgrades Overweight to NEUTRAL. Downgrade is based on valuation. Firm says CRM shares appear richly valued at 39x its CY '06 op cash flow estimate vs. 14-31x for peers. Firm adds that what-if scenarios (including fiscal Q4 '07 subscriber adds of 70,000) generate a potential price target of $35, or 6% upside.

9:43AM Gap Inc (GPS) Lazard Captial upgrades Hold to BUY. Upgrade is beased on channel discussions, firm believes an imminent merchant addition is in the offing. While firm does not know who GPS is likely to hire, any change from the status quo would be positive.