AI
| Followers | 71 |
| Posts | 12229 |
| Boards Moderated | 1 |
| Alias Born | 04/01/2000 |
Thursday, December 08, 2005 9:17:50 PM
From Briefing.com: 5:53PM Preliminary Support And Resistance Table : -Technical- Choppy trade, mixed results and mixed volume for the market. After putting together a good sized retreat into late Wednesday, the averages rebounded in the early going. However, the Nasdaq Comp/100 and the S&P 500 stalled right at the 50% retrace of the decline while the Dow faltered near its 38% level with the averages falling steadily into the afternoon before bouncing over the last 40 minutes. Strong gains in Energy (Oil Service +3.4%, Natural Gas +1.7%, Oil +1.5%, Coal +1.4%) and Health Provider +1.3% were offset by declines in Semi -1.7%, Steel -1.2% and Restaurant -1.2%. For a look at tomorrow's support and resistance levels see The Technical Take.
Close Dow -55.79 at 10755.12, S&P -1.53 at 1255.84, Nasdaq -5.56 at 2246.46: The major indices consolidated for a second straight session as the impact of surging energy prices on the consumer resurfaced and profit-taking in technology's best performing industry group -- semiconductor, ahead of Intel's (INTC 25.70 -0.45) mid-quarter update, weighed on sentiment. To wit, Technology turned in the day's worst performance, as upbeat outlooks from chip makers Texas Instruments (TXN 32.63 -0.93), Xilinx (XLNX 26.02 -0.46) and National Semiconductor (NSM 27.28 -0.40) were evidently already priced into the recent surge from chip makers across the board. The sell-the-news response weighed heavily on a sector that was a driving force behind the rally in November that lifted the three major indices an average of 4.1% -- a rally that so far this month is beginning to look a bit tired. Consumer Discretionary was another area of weakness as losses in autos and retail, influenced partially by a 2.5% surge in oil prices, offset strength in homebuilders. With regard to the latter, Toll Brothers' (TOL 35.55 +1.25) cautious FY06 outlook initially raised housing concerns, but strength in the Treasury market helped investors refocus on TOL's 72% year/year growth in Q4 (Oct) profits. Despite a lackluster 10-yr note auction that showed foreign demand was the weakest since June, growing optimism that the Fed may sound less hawkish at Tuesday's FOMC meeting helped shave 6 basis points off the 10-yr note yield (to 4.45% from 4.51%). Falling bond yields, though, were not enough to prevent further consolidation in the Financial sector, spurred in part by analyst downgrades on Goldman Sachs (GS 128.64 -1.25) and Bear Stearns (BSC 111.01 -0.64). The rate-sensitive Utilities sector, however, perhaps more markedly on its defensive nature, attracted enough safe-haven buying interest to push its year-to-date gain to 12%. Turning in an even stronger performance was Energy, further supporting Briefing.com's bullish view on the sector. Refiners, explorers and drillers -- the year's three best performing S&P industry groups -- extended their respective 83%, 66%, and 55% year-to-date performances as oil surged and natural gas closed at a new record. Health Care was another bright spot on an otherwise dismal day, benefiting from strength in biotech as well as a rebound in HMOs and medical devices. Separately, initial claims unexpectedly rose 6K to 327K -- the highest level since Nov. 19; nevertheless, the data had little impact on equities trading as the outlook for non-farm payroll gains to retrace the monthly 185K level remained intact. DJTA -0.7, DJUA +1.4, DOT -0.3, Nasdaq 100 -0.7, Russell 2000 +0.3, SOX -1.7, S&P Midcap 400 +0.3, XOI +1.5, NYSE Adv/Dec 1830/1462, Nasdaq Adv/Dec 1560/1483
9:09AM On The Wires :Cree (CREE) announces it has licensed its pioneering white LED patent, U.S. Patent No. 6,600,175, to Kingbright Electronic a strategic LED chip customer headquartered in Taiwan. The license authorizes Kingbright to manufacture and sell white LEDs that incorporate Cree chips and is one of several licenses that Cree has granted under the '175 patent this year. Kingbright will be using Cree LED chip products exclusively in its white LED product offerings...
9:04AM Qualcomm raises Q1 EPS guidance; guides revs to high end; reaffirms Q2 (QCOM) 45.00 :Co raises guidance for Q1 (Dec), to EPS of $0.38-0.39 from $0.36-0.38 vs. $0.38 Reuters Estimates consensus; sees Q1 (Dec) revs at the High end of $1.67-1.77 bln vs. 1.73 bln consensus. Co notes: "Updated guidance for the first fiscal quarter reflects higher handset ASPs due primarily to strength in WCDMA handset shipments in Europe and a positive mix in 1xEV-DO MSM chipsets." Co also notes that "consistent with prior guidance, we continue to expect a sequential decline of approximately $0.02-$0.03 in pro forma and total QUALCOMM diluted earnings per share for the second fiscal quarter due primarily to seasonality in product shipments and sequentially higher operating expenses."
1:21PM National Semiconductor (NSM)
27.55 -0.13: On the heels of an encouraging mid-quarter update from Texas Instruments (TXN), National Semiconductor on Thursday reported higher second quarter profits, driven by improved margins and strong demand for wireless and handheld products. The company said it earned $114.7 million, or $0.32 per share, which includes $2.7 million in cost reduction and restructuring charges, on revenue of $544 million. Second quarter revenue grew 10% on a sequential basis, and was 21% higher than the year ago period. Although results may not be comparable, analysts were expecting EPS of $0.28 per share on revenue of $520.18 million, according to Reuters Estimates.
Second quarter bookings increased 6% sequentially, with broad growth in North America, Europe, and Japan. National Semi noted that within the analog products category, new orders for interface and data conversion products grew at a faster rate than the overall company average.
In a statement, the company said that "the wireless and handheld consumer electronics markets are strong." It added that "analog technology, such as our leading-edge power management products, makes these electronic devices possible. That's what is driving our growth right now." Reflecting the strong growth for higher-value analog products, the company posted record gross margin of 57.2% during the quarter. Gross margin improved 1% over the previous quarter and 6.6% over last year's 50.6%.
Based on the results and turns expectations, the company said it expects third quarter revenue to be sequentially flat to down 3%. On that basis, expectations are for revenue of $544 to $560.3 million. Analysts, on average, had projected revenue of $511.45, according to Reuters Estimates. Separately, National Semi announced that its Board of Directors approved a $400 million stock buyback program. During the latest quarter, the company repurchased $275 million of common stock under a previously approved program.
Given the strength in the consumer and communication end markets, which underpins Briefing.com's Overweight rating on the Technology sector, NSM shares have climbed nearly 60% year-to-date, widely outperforming the broader Philadelphia Semiconductor Index over the same period. Accordingly, with strong demand expected to continue to drive momentum in the industry, the prospects remain favorable for the stock. At the current level, the shares are trading at 30.5x forward earnings.
--Richard Jahnke, Briefing.com
1:13PM Brinker Intl. (EAT)
36.66 -4.00: Following Wednesday's close, Brinker announced a 3% rise in total same-restaurant sales for November, and simultaneously cut its forecast for the current quarter and full-year. For the second consecutive month, the company fell short of analysts' estimates. According to the Briefing.com consensus estimate, Brinker's same-restaurant sales were expected to rise 4.5%. Of the company's four concepts, Chili's performed best (+4%) over the year-ago period, while On the Border lagged (-0.3%).
Reining in the high end of its prior estimate by 100 basis points, Brinker now anticipates a 2-3% increase in fiscal Q2 same-restaurant sales. As a result of lower than anticipated sales, the company shrunk its forecasted Q2 EPS estimate to $0.54-0.56. The high end of that range had previously been the company's estimated low end.
Brinker shaved two cents from its previously-guided full-year EPS range, and now foresees $2.31-2.41. Analysts currently expect EPS of $0.56 in Q2 and $2.42 for the full-year (June), but consensus estimates were compiled before Brinker's revisions and are apt to change.
Briefing.com maintains an Underweight rating on the Consumer Discretionary sector. Although consumer spending has held up well in the face of rising gas prices, heating costs, and interest rates, a slowdown is nonetheless expected to affect discretionary issues. At the same time, pockets of strength remain. To that end, Briefing.com recommends McDonald's (MCD) as a holding for active investors, as the industry leader possesses traits that we believe will enable it to demonstrate relative strength in the current environment.
--Lisa Beilfuss, Briefing.com
11:51AM Qualcomm (QCOM)
As a result of higher average selling prices for handsets and strong demand for its Mobile Station Modem chips during the current quarter, Qualcomm raised its forecast for fiscal Q1.
Specifically, the company now expects pro forma EPS of $0.38-0.39 versus prior guidance of $0.36-0.38. This translates to 38% EPS growth over the year-ago period. Qualcomm added that it anticipates revenues to be at the high end of the $1.67-1.77 billion range it had announced last month. According to Reuters Estimates, analysts had been expecting the company to report EPS of $0.38 on sales of $1.73 billion.
Qualcomm's raised guidance comes alongside a bullish mid-quarter update from chip maker Texas Instruments (TXN). Briefing.com holds an Overweight rating on the Technology sector, with a preference for companies like TXN and QCOM that are in good position to reap the benefits of high demand in the consumer and communication end markets. Updates provided by both Qualcomm and Texas Instruments validate our view.
--Lisa Beilfuss, Briefing.com
11:34AM Hovnanian Enterprises (HOV)
48.68 -0.05: Hovnanian Enterprises posted better than expected financial results for its fiscal fourth quarter, even as the pace of housing demand and price increases continues to soften. Although the company said that its more highly regulated markets are returning to more normalized levels, it maintained its fiscal 2006 guidance. However, the homebuilder offered a somber outlook for Q1 2006, citing the adverse impact of Hurricane Wilma, regulatory delays in California, and construction delays caused by labor and material shortages in Arizona and Florida.
After the close on Wednesday, Hovnanian reported fourth quarter profits of $165.4 million, or $2.53 per share, up sharply from last year's $133.8 million, or $2.06 per share. The company's revenue increased 26% to $1.8 billion, versus $1.4 billion a year earlier, and backlog was up 91%, to $5.1 billion. The dollar value of net contracts during the period increased by 46.4%, while the value of home deliveries rose by 35.1%. Results for the latest quarter surpassed the consensus estimate for EPS of $2.42 and revenue of $1.77 billion. Despite beating analyst estimates, the builder said results would have been better without the impact of Hurricane Wilma on its ability to deliver homes in southeast and southwest Florida during the last 10 days of fiscal 2005.
Looking to the first quarter, the company forecast earnings in the range of $1.10 to $1.25 per share, representing 13% to 16% of its full-year 2006 earnings projection. As previously mentioned, the company noted that a variety of factors are likely to impact near-term results, despite its strong backlog of homes heading into the new year. According to Reuters Estimates, analysts were looking for EPS of $1.58. For fiscal 2006, Hovnanian continues to see earnings in the range of $8.05 to $8.40 per share, including pre-tax and other expenses. Analysts, on average, had projected EPS of $8.42.
Amid weakness in the homebuilding sector, shares of Hovnanian have declined sharply after peaking in mid-July, dropping more than 30% from their high of $73.40. The stock is up only slightly since the beginning of the year. Given the impact of rising interest rates and slowing housing demand, homebuilding stocks are expected to continue to feel the impact of the waning housing market.
--Richard Jahnke, Briefing.com
10:54AM Costco (COST)
48.50 -0.85: Ahead of this morning's opening bell, Costco (COST) announced 12% increases in both sales and net income during its fiscal first quarter. Excluding a charge related to Hurricane Wilma, which was dilutive by one cent per share, Costco delivered EPS of $0.46 and exceeded analysts' expectations by a penny.
On its top line, the company booked $12.9 billion, about 2% of which was membership fees. The top line result was slightly below the Reuters Estimates consensus. On a comparable warehouse basis, net sales rose 9%. At Wal-Mart (WMT), Costco's primary competitor, same-store sales rose 3.8% during its most recently reported quarter (Oct.).
The world's ninth largest retailer didn't issue any earnings guidance in its press release. Costco did say that it plans to open 18-20 new warehouses by fiscal year-end (Sept.), which will effectively widen its store base by 4%. For fiscal Q2 (Feb.), analysts anticipate earnings of $0.60 per share from Costco. Wall Street forecasts full-year EPS of $2.29, which translates to 13% year-over-year growth.
Currently trading at 21.0x estimated full year earnings, COST shares are priced at a slight discount to their 22.8x five-year average. Meanwhile, WMT, a recently featured bargain hunting idea on Briefing.com, trades at 18.1x full-year (Jan.) earnings - a discount to its 22.9x five-year average.
--Lisa Beilfuss, Briefing.com
10:35AM McDonald's (MCD)
34.98 -0.28: With its November same-store sales report this morning, McDonald's, a suggested holding in Briefing.com's Active Portfolio, ran its string of worldwide comparable sales increases to 31 consecutive months. To wit, global comparable sales in November increased 4.0%, bringing the company's year-to-date gain to 3.8%. Once again, the strength in the U.S. was the driving force behind the encouraging performance.
In the U.S. comparable sales jumped 4.8%, aided by McDonald's breakfast menu and extended hours. That increase came on top of a strong 7.1% increase in the year-ago period and was ahead of the Briefing.com consensus estimate of +3.3%. The largest comparable sales gain, however, was delivered by the company's Asia/Pacific, Middle East and Africa segment, which recorded a 7.1% gain in comparable sales against a 0.2% decline last year. Europe was essentially flat with a 0.1% increase in comparable sales. That was a bit disappointing, particularly against the consensus estimate of +3.0%, but the European segment was up against a tough comparison that stemmed from McDonald's aggressive sales activity last year that included national coupon promotions in the U.K. and Germany.
Separately, the company noted it expects to incur a charge of about $0.02 per share in Q4 for asset impairment, primarily in South Korea, and added that, if average exchange rates remain at current levels, Q4 EPS is likely to be negatively impacted by at least $0.01 per share.
We would have liked to have seen a better showing from the European segment, but overall, it is evident that McDonald's is continuing to enjoy solid operating momentum. The latest update on its comparable sales performance does not alter our bullish view on the stock nor its standing as a suggesting holding in the active portfolio.
--Patrick J. O'Hare, Briefing.com
9:35AM Chevron Corp. (CVX)
59.30: Windfall profits in the oil industry continue to flow back to investors. Today, Chevron announced it will extend its current buyback program, as well as increase its 2006 capital and exploratory budget by 35% to $14.8 bln. CVX's Board approved a buyback program of up to $5 bln in stock over a period of three years, on the back of an earlier repurchase program of the same amount. Today's news underscores our current Overweight rating of the Energy sector, as stocks continue to offer strong earnings momentum and increasing shareholder returns at attractive valuations.
The flood of cash being deployed across the energy patch underpins the bullish fundamentals for the Oil Services companies. We have long held a positive view, and correctly so, for the group as we anticipated soaring energy prices and tight global supplies would drive producers to raise capex budgets and, in turn, increase demand for drillers, services, and equipment companies.
Almost three quarters of Chevron's capex budget is allocated to upstream development and production as producers look to raise output. Prospects for oil and gas production outside the US remain the dominant area for investment. Chevron's international upstream budget is $8.0 bln, while US upstream is only $3.3 bln. CVX highlighted high-impact opportunities in the deepwater Gulf of Mexico and western Africa, along with longer-term projects in Angola, Nigeria, Kazakhstan, and Australia. This bodes well for the offshore deepwater drillers including Transocean (RIG), a suggested holding in our Active Portfolio. The rest of the $14.8 bln capex plan includes $1.0 bln in the US and $1.8 bln in international downstream operations, with the remainder allocated to Chemicals.
The second largest oil company stated, "the size of our overall program reflects a strong queue of growth projects." Upstream spending, including investment to commercialize its natural gas resources, is estimated at $1 bln and is intended to include LNG facilities, gas-to-liquids (GTL) facilities and to ensure regasification and import capability for the US markets. We think the risk/reward still plays into CVX's favor with shares trading at 9.5x current and 8.9x forward earnings, compared to Exxon Mobil (XOM) at 11.8x. CVX offers a dividend yield of 3% and return on assets of 15.2%.
--Kimberly DuBord, Briefing.com
9:21AM General Motors (GM)
23.04: General Motors confirmed that it is in discussions with Kirk Kerkorian's Tracinda Corp. about the possibility of having representation on the company's Board of Directors. The news isn't entirely surprising as Kerkorian has been amassing a larger position in GM in a bid to force management to make sweeping changes that will stem the loss of market share and return the auto company to profitability. Kerkorian's Tracinda Corp. currently owns 9.9% of GM's stock.
When speculation of these discussions broke late Wednesday, GM's stock rebounded in noticeable fashion and the broader market pared its losses. The presumption was that the addition of a Tracinda representative to the GM board would be a telltale sign that the company is going to be on a fast restructuring track that will eradicate the talk heard in the past about the possibility of a bankruptcy filing down the road. For the record, GM dismissed the bankruptcy talk as being misguided.
In any event, the market seems to like the implications of a Tracinda representative being added to the board. It is believed Jerome York - a Kerkorian lieutenant and former CFO of Chrysler - would be tapped to fill the board seat. At first blush, this development could bode well for the stock near-term. However, as intimated in Briefing.com's previous coverage of GM, the cost-cutting that flows out of management changes is only half the equation. GM still needs to produce cars people want to buy. Until it does, the outlook for the stock remains cloudy and negates taking a long-term position at this point.
--Patrick J. O'Hare, Briefing.com
9:14AM Toll Brothers (TOL)
34.30: Luxury home builder Toll Brothers on Thursday reported a 72% jump in fourth quarter profits, but offered a cautious outlook for fiscal 2006 amid concerns about a slowdown in the housing market. For its latest quarter, the Horsham, PA-based builder said it earned $310.3 million, or $1.84 per share, compared with $180.6 million, or $1.11 per share, in the prior year period - $0.18 better than the Reuters Estimates consensus of $1.66 per share.
Fourth quarter revenue rose 40% to a record $2.02 billion from $1.45 billion last year. However, that was slightly lower than analysts' top-line estimate of $2.04 billion, indicating that housing demand is returning to more normalized levels, according to the Toll Brother's Chairman and CEO Robert Toll. Meanwhile, the company said its backlog increased 36% to $6.01 billion, which is a fiscal year-end record. The company's fourth quarter contracts of $1.59 billion, or 2,272 homes, increased 4% over last year's $1.53 billion, or 2,248 homes.
The company noted that peaking housing market continues to decelerate and that it expects fiscal 2006 earnings to be $4.79-5.27, which includes $0.11 per share for options expensing that it previously did not expense. It is unclear if that guidance is comparable to the current Reuters Estimates consensus estimate of $5.26. Separately, Toll Brothers said it remains uncertain about fiscal 2007 results, which could prove "better or worse" than its previous guidance of 20% growth.
As previously discussed in its preliminary fourth quarter report, the "housing market is not as robust today as it was throughout 2004 and through the summer of 2005, although there is wide variation in local markets." Accordingly, Robert Toll stated, "we look to the future with cautious optimism. We believe demand for our luxury homes relies, in large measure, on consumer confidence, which has suffered recently among our clientele. We also believe that the fundamental imbalance between supply and demand will reassert itself. The strong, baby boomer-driven demographics and the growth in high income households should continue to bolster demand for luxury homes." Despite its strong quarterly performance, Toll Brothers' cautious outlook will likely weigh on the broader industry, as well as the Consumer Discretionary sector, for which Briefing.com currently holds an Underweight rating.
--Richard Jahnke, Briefing.com
8:46AM Texas Instruments (TXN)
33.56: All the signs were pointing to a better than expected mid-quarter update from Texas Instruments. The world's top manufacturer of chips used in mobile phones upped the ante for the fourth quarter, guiding towards the upper end of its forecasts driven by broad-based demand for semiconductors. With most tech companies erring on the side of conservatism, with a few exceptions, the bullish tone from Texas Instruments took some by surprise. The news bodes well for other semi-related companies, including the market leader, Intel (INTC), and National Semi (NSM), both of which will release scheduled updates on Thursday. Intel, though, is likely to have more supply issues.
TI now expects current quarter earnings of $0.38-0.40 per share (including option expense of $0.03) on revenues of $3.56 bln to $3.71 bln. This compares to its previous guidance of $0.36-$0.40 per share on revenues of $3.43-$3.72 bln. Total sales of $3.63 bln indicate TI now expects sequential growth of 1.2% versus its prior guidance of a 1% decline. The range of analysts' estimates for Q4 sales is currently $3.55-3.95 bln.
TI attributed the growth to strong demand in Asia, along with particular strength in wireless, DLP products, and high-end analog chips (HPA) used in a wide range of consumer electronic products. DLP, or Digital Light Projection, is TI's advanced proprietary technology in television sets. Handsets have been a key area of growth this year due to a strong product cycle, replacement demand, and rising global penetration. The quarter's upside is clearly coming from its semiconductor business with the company now anticipating semiconductor revenues to range between $3.2-$3.33 bln. This compares to its previous forecasts of $3.08-$3.33 bln - equating to 4% growth versus prior guidance of 2%. The revenue estimate for its sensors and controls unit was tightened to $295-$305 mln from its prior estimate of $290-$310 mln.
Texas Instruments also stated the supply shortage it mentioned during its October earnings cal, had yet to be resolved due to strong demand. Shares rose immediately following the release in after-hours trading. The stock has gained 36.3% to date compared to a 15% rise in the Philadelphia Semi Index. Despite the outperformance, we continue to hold a favorable view on TI as product cycles in DLP, HPA, and 3G support further upside. We are currently recommending an Overweight position in Technology due to the broad-based growth, from wireless to PCs and consumer electronics products.
--Kimberly DuBord, Briefing.com
9:42AM Electro Optical Sciences (MELA) Stanford Research initiates BUY. Target $13. Firm is saying the co has developed a hand held imaging device (MelaFind) that, when used in association with the co's proprietary database of pigmented skin lesions and mathematical algorithms that classify lesions, can detect melanoma more effectively than current subjective techniques. The firm says while not yet approved by the FDA, the co has entered into a binding protocol agreement with the FDA to conduct a pivotal trial that could expedite approval. Firm says that trial will begin enrolling patients in early 2006 at over 20 sites and could lead to Premarket Approval to commercialize MelaFind in 2007.
9:42AM SpectraLink (SLNK) Kaufman Bros upgrades Hold to BUY. Target $13 to $15. The firm cites increased confidence the company will meet their 2006 expectations of almost 20% revenue growth versus 2005. The improved outlook results from their belief the OEM channel will be a major contributor to revenue due to a new contract SpectraLink's OEM partner, Avaya (AV), won from Home Depot (HD) that Kaufman believes includes upgrading the wireless telephony systems in Home Depot stores.
9:40AM Shanda Interactive (SNDA) Bear Stearns downgrades Outperform to UNDERPERFORM . Target $17. Firm believes the co has tremendous value that has yet to be leveraged for future growth. However, the co's recent change in operating model and the lack of clear guidance for acceptance of its "EZ" product line leaves them with reservations over the near-term outlook.
9:40AM Komag (KOMG) Needham & Co reiterates STRONG BUY. Target $40 to $44. Firm is saying that despite investor concerns, they believe industry supply and demand will remain in balance or even below requirements for much of 2006, causing their forecast for KOMG to likely require further upward revision. Given the co's execution, outlook, and likely further upward estimate revisions, they view the current level of short interest (9.7 mln by the last report) as inappropriate and a catalyst for further strength in the stock.
9:39AM CYTYC Corp (CYTC) Stanford Research reiterates BUY. Target $30 to $35. Firm believes short- to medium-term headwinds are piling up. They say the lack of Lambda platform combined with weak midsize SUVs stymie revenue growth through 2007.
9:39AM American Axle (AXL) Prudential downgrades Overweight to NEUTRAL. Target $26 to $22. Firm believes short- to medium-term headwinds are piling up. They say the lack of Lambda platform combined with weak midsize SUVs stymie revenue growth through 2007.
9:38AM DOV Pharma (DOVP) Jefferies & Co initiates BUY. Target $18. Firm believes DOVP is well positioned to maximize the economic value of its products. On the clinical and regulatory fronts, they anticipate a flow of news events in 2006 that could drive share price appreciation, including FDA approval for indiplon and Phase III data for bicifadine for chronic lower back pain.
9:38AM Casey's General (CASY) Morgan Keegan upgrades Mkt Perform to OUTPERFORM. Upgrade follows strong Q2 results, saying over the past several quarters, the co has significantly reduced earnings volatility and has reported upside to our estimates on several occasions.
9:37AM Toll Brothers (TOL) Susquehanna Financial downgrades Positive to NEUTRAL. Firm comments that co's new guidance indicates that not only has demand slowed for TOL's high-end product, but in a surprising turn, operating margins will likely be impacted significantly more than their already declining forecast implied. Without the benefit of greater details coming forth from the conference call at 2pm E.T., they suspect that the lower-than-expected guidance is being driven by more aggressive pricing in its current order stream than they had predicted.
9:36AM eBay (EBAY) Am Tech/JSA Research downgrades Buy to HOLD. Firm believes the market has fully priced in continued strength from EBAY's core franchise in 2006 and they would be taking profits at these levels. They believe that the thesis they outlined in their upgrade in May has largely played out and the Skype acquisition and GOOG competition add risk to the stock. They say Skype makes eBay more of a long-shot growth story than a proven growth engine, and they don't think they'll be able to tell if the Skype acquisition was a good idea until the middle of 2006.
9:35AM Pegasystems (PEGA) Adams Harkness initiates BUY. Target $9. Firm is saying they like the co's new "quick value" strategy and believe it is well positioned to grow, but given the shares' recent run, they would be buyers on pullbacks.
Close Dow -55.79 at 10755.12, S&P -1.53 at 1255.84, Nasdaq -5.56 at 2246.46: The major indices consolidated for a second straight session as the impact of surging energy prices on the consumer resurfaced and profit-taking in technology's best performing industry group -- semiconductor, ahead of Intel's (INTC 25.70 -0.45) mid-quarter update, weighed on sentiment. To wit, Technology turned in the day's worst performance, as upbeat outlooks from chip makers Texas Instruments (TXN 32.63 -0.93), Xilinx (XLNX 26.02 -0.46) and National Semiconductor (NSM 27.28 -0.40) were evidently already priced into the recent surge from chip makers across the board. The sell-the-news response weighed heavily on a sector that was a driving force behind the rally in November that lifted the three major indices an average of 4.1% -- a rally that so far this month is beginning to look a bit tired. Consumer Discretionary was another area of weakness as losses in autos and retail, influenced partially by a 2.5% surge in oil prices, offset strength in homebuilders. With regard to the latter, Toll Brothers' (TOL 35.55 +1.25) cautious FY06 outlook initially raised housing concerns, but strength in the Treasury market helped investors refocus on TOL's 72% year/year growth in Q4 (Oct) profits. Despite a lackluster 10-yr note auction that showed foreign demand was the weakest since June, growing optimism that the Fed may sound less hawkish at Tuesday's FOMC meeting helped shave 6 basis points off the 10-yr note yield (to 4.45% from 4.51%). Falling bond yields, though, were not enough to prevent further consolidation in the Financial sector, spurred in part by analyst downgrades on Goldman Sachs (GS 128.64 -1.25) and Bear Stearns (BSC 111.01 -0.64). The rate-sensitive Utilities sector, however, perhaps more markedly on its defensive nature, attracted enough safe-haven buying interest to push its year-to-date gain to 12%. Turning in an even stronger performance was Energy, further supporting Briefing.com's bullish view on the sector. Refiners, explorers and drillers -- the year's three best performing S&P industry groups -- extended their respective 83%, 66%, and 55% year-to-date performances as oil surged and natural gas closed at a new record. Health Care was another bright spot on an otherwise dismal day, benefiting from strength in biotech as well as a rebound in HMOs and medical devices. Separately, initial claims unexpectedly rose 6K to 327K -- the highest level since Nov. 19; nevertheless, the data had little impact on equities trading as the outlook for non-farm payroll gains to retrace the monthly 185K level remained intact. DJTA -0.7, DJUA +1.4, DOT -0.3, Nasdaq 100 -0.7, Russell 2000 +0.3, SOX -1.7, S&P Midcap 400 +0.3, XOI +1.5, NYSE Adv/Dec 1830/1462, Nasdaq Adv/Dec 1560/1483
9:09AM On The Wires :Cree (CREE) announces it has licensed its pioneering white LED patent, U.S. Patent No. 6,600,175, to Kingbright Electronic a strategic LED chip customer headquartered in Taiwan. The license authorizes Kingbright to manufacture and sell white LEDs that incorporate Cree chips and is one of several licenses that Cree has granted under the '175 patent this year. Kingbright will be using Cree LED chip products exclusively in its white LED product offerings...
9:04AM Qualcomm raises Q1 EPS guidance; guides revs to high end; reaffirms Q2 (QCOM) 45.00 :Co raises guidance for Q1 (Dec), to EPS of $0.38-0.39 from $0.36-0.38 vs. $0.38 Reuters Estimates consensus; sees Q1 (Dec) revs at the High end of $1.67-1.77 bln vs. 1.73 bln consensus. Co notes: "Updated guidance for the first fiscal quarter reflects higher handset ASPs due primarily to strength in WCDMA handset shipments in Europe and a positive mix in 1xEV-DO MSM chipsets." Co also notes that "consistent with prior guidance, we continue to expect a sequential decline of approximately $0.02-$0.03 in pro forma and total QUALCOMM diluted earnings per share for the second fiscal quarter due primarily to seasonality in product shipments and sequentially higher operating expenses."
1:21PM National Semiconductor (NSM)
27.55 -0.13: On the heels of an encouraging mid-quarter update from Texas Instruments (TXN), National Semiconductor on Thursday reported higher second quarter profits, driven by improved margins and strong demand for wireless and handheld products. The company said it earned $114.7 million, or $0.32 per share, which includes $2.7 million in cost reduction and restructuring charges, on revenue of $544 million. Second quarter revenue grew 10% on a sequential basis, and was 21% higher than the year ago period. Although results may not be comparable, analysts were expecting EPS of $0.28 per share on revenue of $520.18 million, according to Reuters Estimates.
Second quarter bookings increased 6% sequentially, with broad growth in North America, Europe, and Japan. National Semi noted that within the analog products category, new orders for interface and data conversion products grew at a faster rate than the overall company average.
In a statement, the company said that "the wireless and handheld consumer electronics markets are strong." It added that "analog technology, such as our leading-edge power management products, makes these electronic devices possible. That's what is driving our growth right now." Reflecting the strong growth for higher-value analog products, the company posted record gross margin of 57.2% during the quarter. Gross margin improved 1% over the previous quarter and 6.6% over last year's 50.6%.
Based on the results and turns expectations, the company said it expects third quarter revenue to be sequentially flat to down 3%. On that basis, expectations are for revenue of $544 to $560.3 million. Analysts, on average, had projected revenue of $511.45, according to Reuters Estimates. Separately, National Semi announced that its Board of Directors approved a $400 million stock buyback program. During the latest quarter, the company repurchased $275 million of common stock under a previously approved program.
Given the strength in the consumer and communication end markets, which underpins Briefing.com's Overweight rating on the Technology sector, NSM shares have climbed nearly 60% year-to-date, widely outperforming the broader Philadelphia Semiconductor Index over the same period. Accordingly, with strong demand expected to continue to drive momentum in the industry, the prospects remain favorable for the stock. At the current level, the shares are trading at 30.5x forward earnings.
--Richard Jahnke, Briefing.com
1:13PM Brinker Intl. (EAT)
36.66 -4.00: Following Wednesday's close, Brinker announced a 3% rise in total same-restaurant sales for November, and simultaneously cut its forecast for the current quarter and full-year. For the second consecutive month, the company fell short of analysts' estimates. According to the Briefing.com consensus estimate, Brinker's same-restaurant sales were expected to rise 4.5%. Of the company's four concepts, Chili's performed best (+4%) over the year-ago period, while On the Border lagged (-0.3%).
Reining in the high end of its prior estimate by 100 basis points, Brinker now anticipates a 2-3% increase in fiscal Q2 same-restaurant sales. As a result of lower than anticipated sales, the company shrunk its forecasted Q2 EPS estimate to $0.54-0.56. The high end of that range had previously been the company's estimated low end.
Brinker shaved two cents from its previously-guided full-year EPS range, and now foresees $2.31-2.41. Analysts currently expect EPS of $0.56 in Q2 and $2.42 for the full-year (June), but consensus estimates were compiled before Brinker's revisions and are apt to change.
Briefing.com maintains an Underweight rating on the Consumer Discretionary sector. Although consumer spending has held up well in the face of rising gas prices, heating costs, and interest rates, a slowdown is nonetheless expected to affect discretionary issues. At the same time, pockets of strength remain. To that end, Briefing.com recommends McDonald's (MCD) as a holding for active investors, as the industry leader possesses traits that we believe will enable it to demonstrate relative strength in the current environment.
--Lisa Beilfuss, Briefing.com
11:51AM Qualcomm (QCOM)
As a result of higher average selling prices for handsets and strong demand for its Mobile Station Modem chips during the current quarter, Qualcomm raised its forecast for fiscal Q1.
Specifically, the company now expects pro forma EPS of $0.38-0.39 versus prior guidance of $0.36-0.38. This translates to 38% EPS growth over the year-ago period. Qualcomm added that it anticipates revenues to be at the high end of the $1.67-1.77 billion range it had announced last month. According to Reuters Estimates, analysts had been expecting the company to report EPS of $0.38 on sales of $1.73 billion.
Qualcomm's raised guidance comes alongside a bullish mid-quarter update from chip maker Texas Instruments (TXN). Briefing.com holds an Overweight rating on the Technology sector, with a preference for companies like TXN and QCOM that are in good position to reap the benefits of high demand in the consumer and communication end markets. Updates provided by both Qualcomm and Texas Instruments validate our view.
--Lisa Beilfuss, Briefing.com
11:34AM Hovnanian Enterprises (HOV)
48.68 -0.05: Hovnanian Enterprises posted better than expected financial results for its fiscal fourth quarter, even as the pace of housing demand and price increases continues to soften. Although the company said that its more highly regulated markets are returning to more normalized levels, it maintained its fiscal 2006 guidance. However, the homebuilder offered a somber outlook for Q1 2006, citing the adverse impact of Hurricane Wilma, regulatory delays in California, and construction delays caused by labor and material shortages in Arizona and Florida.
After the close on Wednesday, Hovnanian reported fourth quarter profits of $165.4 million, or $2.53 per share, up sharply from last year's $133.8 million, or $2.06 per share. The company's revenue increased 26% to $1.8 billion, versus $1.4 billion a year earlier, and backlog was up 91%, to $5.1 billion. The dollar value of net contracts during the period increased by 46.4%, while the value of home deliveries rose by 35.1%. Results for the latest quarter surpassed the consensus estimate for EPS of $2.42 and revenue of $1.77 billion. Despite beating analyst estimates, the builder said results would have been better without the impact of Hurricane Wilma on its ability to deliver homes in southeast and southwest Florida during the last 10 days of fiscal 2005.
Looking to the first quarter, the company forecast earnings in the range of $1.10 to $1.25 per share, representing 13% to 16% of its full-year 2006 earnings projection. As previously mentioned, the company noted that a variety of factors are likely to impact near-term results, despite its strong backlog of homes heading into the new year. According to Reuters Estimates, analysts were looking for EPS of $1.58. For fiscal 2006, Hovnanian continues to see earnings in the range of $8.05 to $8.40 per share, including pre-tax and other expenses. Analysts, on average, had projected EPS of $8.42.
Amid weakness in the homebuilding sector, shares of Hovnanian have declined sharply after peaking in mid-July, dropping more than 30% from their high of $73.40. The stock is up only slightly since the beginning of the year. Given the impact of rising interest rates and slowing housing demand, homebuilding stocks are expected to continue to feel the impact of the waning housing market.
--Richard Jahnke, Briefing.com
10:54AM Costco (COST)
48.50 -0.85: Ahead of this morning's opening bell, Costco (COST) announced 12% increases in both sales and net income during its fiscal first quarter. Excluding a charge related to Hurricane Wilma, which was dilutive by one cent per share, Costco delivered EPS of $0.46 and exceeded analysts' expectations by a penny.
On its top line, the company booked $12.9 billion, about 2% of which was membership fees. The top line result was slightly below the Reuters Estimates consensus. On a comparable warehouse basis, net sales rose 9%. At Wal-Mart (WMT), Costco's primary competitor, same-store sales rose 3.8% during its most recently reported quarter (Oct.).
The world's ninth largest retailer didn't issue any earnings guidance in its press release. Costco did say that it plans to open 18-20 new warehouses by fiscal year-end (Sept.), which will effectively widen its store base by 4%. For fiscal Q2 (Feb.), analysts anticipate earnings of $0.60 per share from Costco. Wall Street forecasts full-year EPS of $2.29, which translates to 13% year-over-year growth.
Currently trading at 21.0x estimated full year earnings, COST shares are priced at a slight discount to their 22.8x five-year average. Meanwhile, WMT, a recently featured bargain hunting idea on Briefing.com, trades at 18.1x full-year (Jan.) earnings - a discount to its 22.9x five-year average.
--Lisa Beilfuss, Briefing.com
10:35AM McDonald's (MCD)
34.98 -0.28: With its November same-store sales report this morning, McDonald's, a suggested holding in Briefing.com's Active Portfolio, ran its string of worldwide comparable sales increases to 31 consecutive months. To wit, global comparable sales in November increased 4.0%, bringing the company's year-to-date gain to 3.8%. Once again, the strength in the U.S. was the driving force behind the encouraging performance.
In the U.S. comparable sales jumped 4.8%, aided by McDonald's breakfast menu and extended hours. That increase came on top of a strong 7.1% increase in the year-ago period and was ahead of the Briefing.com consensus estimate of +3.3%. The largest comparable sales gain, however, was delivered by the company's Asia/Pacific, Middle East and Africa segment, which recorded a 7.1% gain in comparable sales against a 0.2% decline last year. Europe was essentially flat with a 0.1% increase in comparable sales. That was a bit disappointing, particularly against the consensus estimate of +3.0%, but the European segment was up against a tough comparison that stemmed from McDonald's aggressive sales activity last year that included national coupon promotions in the U.K. and Germany.
Separately, the company noted it expects to incur a charge of about $0.02 per share in Q4 for asset impairment, primarily in South Korea, and added that, if average exchange rates remain at current levels, Q4 EPS is likely to be negatively impacted by at least $0.01 per share.
We would have liked to have seen a better showing from the European segment, but overall, it is evident that McDonald's is continuing to enjoy solid operating momentum. The latest update on its comparable sales performance does not alter our bullish view on the stock nor its standing as a suggesting holding in the active portfolio.
--Patrick J. O'Hare, Briefing.com
9:35AM Chevron Corp. (CVX)
59.30: Windfall profits in the oil industry continue to flow back to investors. Today, Chevron announced it will extend its current buyback program, as well as increase its 2006 capital and exploratory budget by 35% to $14.8 bln. CVX's Board approved a buyback program of up to $5 bln in stock over a period of three years, on the back of an earlier repurchase program of the same amount. Today's news underscores our current Overweight rating of the Energy sector, as stocks continue to offer strong earnings momentum and increasing shareholder returns at attractive valuations.
The flood of cash being deployed across the energy patch underpins the bullish fundamentals for the Oil Services companies. We have long held a positive view, and correctly so, for the group as we anticipated soaring energy prices and tight global supplies would drive producers to raise capex budgets and, in turn, increase demand for drillers, services, and equipment companies.
Almost three quarters of Chevron's capex budget is allocated to upstream development and production as producers look to raise output. Prospects for oil and gas production outside the US remain the dominant area for investment. Chevron's international upstream budget is $8.0 bln, while US upstream is only $3.3 bln. CVX highlighted high-impact opportunities in the deepwater Gulf of Mexico and western Africa, along with longer-term projects in Angola, Nigeria, Kazakhstan, and Australia. This bodes well for the offshore deepwater drillers including Transocean (RIG), a suggested holding in our Active Portfolio. The rest of the $14.8 bln capex plan includes $1.0 bln in the US and $1.8 bln in international downstream operations, with the remainder allocated to Chemicals.
The second largest oil company stated, "the size of our overall program reflects a strong queue of growth projects." Upstream spending, including investment to commercialize its natural gas resources, is estimated at $1 bln and is intended to include LNG facilities, gas-to-liquids (GTL) facilities and to ensure regasification and import capability for the US markets. We think the risk/reward still plays into CVX's favor with shares trading at 9.5x current and 8.9x forward earnings, compared to Exxon Mobil (XOM) at 11.8x. CVX offers a dividend yield of 3% and return on assets of 15.2%.
--Kimberly DuBord, Briefing.com
9:21AM General Motors (GM)
23.04: General Motors confirmed that it is in discussions with Kirk Kerkorian's Tracinda Corp. about the possibility of having representation on the company's Board of Directors. The news isn't entirely surprising as Kerkorian has been amassing a larger position in GM in a bid to force management to make sweeping changes that will stem the loss of market share and return the auto company to profitability. Kerkorian's Tracinda Corp. currently owns 9.9% of GM's stock.
When speculation of these discussions broke late Wednesday, GM's stock rebounded in noticeable fashion and the broader market pared its losses. The presumption was that the addition of a Tracinda representative to the GM board would be a telltale sign that the company is going to be on a fast restructuring track that will eradicate the talk heard in the past about the possibility of a bankruptcy filing down the road. For the record, GM dismissed the bankruptcy talk as being misguided.
In any event, the market seems to like the implications of a Tracinda representative being added to the board. It is believed Jerome York - a Kerkorian lieutenant and former CFO of Chrysler - would be tapped to fill the board seat. At first blush, this development could bode well for the stock near-term. However, as intimated in Briefing.com's previous coverage of GM, the cost-cutting that flows out of management changes is only half the equation. GM still needs to produce cars people want to buy. Until it does, the outlook for the stock remains cloudy and negates taking a long-term position at this point.
--Patrick J. O'Hare, Briefing.com
9:14AM Toll Brothers (TOL)
34.30: Luxury home builder Toll Brothers on Thursday reported a 72% jump in fourth quarter profits, but offered a cautious outlook for fiscal 2006 amid concerns about a slowdown in the housing market. For its latest quarter, the Horsham, PA-based builder said it earned $310.3 million, or $1.84 per share, compared with $180.6 million, or $1.11 per share, in the prior year period - $0.18 better than the Reuters Estimates consensus of $1.66 per share.
Fourth quarter revenue rose 40% to a record $2.02 billion from $1.45 billion last year. However, that was slightly lower than analysts' top-line estimate of $2.04 billion, indicating that housing demand is returning to more normalized levels, according to the Toll Brother's Chairman and CEO Robert Toll. Meanwhile, the company said its backlog increased 36% to $6.01 billion, which is a fiscal year-end record. The company's fourth quarter contracts of $1.59 billion, or 2,272 homes, increased 4% over last year's $1.53 billion, or 2,248 homes.
The company noted that peaking housing market continues to decelerate and that it expects fiscal 2006 earnings to be $4.79-5.27, which includes $0.11 per share for options expensing that it previously did not expense. It is unclear if that guidance is comparable to the current Reuters Estimates consensus estimate of $5.26. Separately, Toll Brothers said it remains uncertain about fiscal 2007 results, which could prove "better or worse" than its previous guidance of 20% growth.
As previously discussed in its preliminary fourth quarter report, the "housing market is not as robust today as it was throughout 2004 and through the summer of 2005, although there is wide variation in local markets." Accordingly, Robert Toll stated, "we look to the future with cautious optimism. We believe demand for our luxury homes relies, in large measure, on consumer confidence, which has suffered recently among our clientele. We also believe that the fundamental imbalance between supply and demand will reassert itself. The strong, baby boomer-driven demographics and the growth in high income households should continue to bolster demand for luxury homes." Despite its strong quarterly performance, Toll Brothers' cautious outlook will likely weigh on the broader industry, as well as the Consumer Discretionary sector, for which Briefing.com currently holds an Underweight rating.
--Richard Jahnke, Briefing.com
8:46AM Texas Instruments (TXN)
33.56: All the signs were pointing to a better than expected mid-quarter update from Texas Instruments. The world's top manufacturer of chips used in mobile phones upped the ante for the fourth quarter, guiding towards the upper end of its forecasts driven by broad-based demand for semiconductors. With most tech companies erring on the side of conservatism, with a few exceptions, the bullish tone from Texas Instruments took some by surprise. The news bodes well for other semi-related companies, including the market leader, Intel (INTC), and National Semi (NSM), both of which will release scheduled updates on Thursday. Intel, though, is likely to have more supply issues.
TI now expects current quarter earnings of $0.38-0.40 per share (including option expense of $0.03) on revenues of $3.56 bln to $3.71 bln. This compares to its previous guidance of $0.36-$0.40 per share on revenues of $3.43-$3.72 bln. Total sales of $3.63 bln indicate TI now expects sequential growth of 1.2% versus its prior guidance of a 1% decline. The range of analysts' estimates for Q4 sales is currently $3.55-3.95 bln.
TI attributed the growth to strong demand in Asia, along with particular strength in wireless, DLP products, and high-end analog chips (HPA) used in a wide range of consumer electronic products. DLP, or Digital Light Projection, is TI's advanced proprietary technology in television sets. Handsets have been a key area of growth this year due to a strong product cycle, replacement demand, and rising global penetration. The quarter's upside is clearly coming from its semiconductor business with the company now anticipating semiconductor revenues to range between $3.2-$3.33 bln. This compares to its previous forecasts of $3.08-$3.33 bln - equating to 4% growth versus prior guidance of 2%. The revenue estimate for its sensors and controls unit was tightened to $295-$305 mln from its prior estimate of $290-$310 mln.
Texas Instruments also stated the supply shortage it mentioned during its October earnings cal, had yet to be resolved due to strong demand. Shares rose immediately following the release in after-hours trading. The stock has gained 36.3% to date compared to a 15% rise in the Philadelphia Semi Index. Despite the outperformance, we continue to hold a favorable view on TI as product cycles in DLP, HPA, and 3G support further upside. We are currently recommending an Overweight position in Technology due to the broad-based growth, from wireless to PCs and consumer electronics products.
--Kimberly DuBord, Briefing.com
9:42AM Electro Optical Sciences (MELA) Stanford Research initiates BUY. Target $13. Firm is saying the co has developed a hand held imaging device (MelaFind) that, when used in association with the co's proprietary database of pigmented skin lesions and mathematical algorithms that classify lesions, can detect melanoma more effectively than current subjective techniques. The firm says while not yet approved by the FDA, the co has entered into a binding protocol agreement with the FDA to conduct a pivotal trial that could expedite approval. Firm says that trial will begin enrolling patients in early 2006 at over 20 sites and could lead to Premarket Approval to commercialize MelaFind in 2007.
9:42AM SpectraLink (SLNK) Kaufman Bros upgrades Hold to BUY. Target $13 to $15. The firm cites increased confidence the company will meet their 2006 expectations of almost 20% revenue growth versus 2005. The improved outlook results from their belief the OEM channel will be a major contributor to revenue due to a new contract SpectraLink's OEM partner, Avaya (AV), won from Home Depot (HD) that Kaufman believes includes upgrading the wireless telephony systems in Home Depot stores.
9:40AM Shanda Interactive (SNDA) Bear Stearns downgrades Outperform to UNDERPERFORM . Target $17. Firm believes the co has tremendous value that has yet to be leveraged for future growth. However, the co's recent change in operating model and the lack of clear guidance for acceptance of its "EZ" product line leaves them with reservations over the near-term outlook.
9:40AM Komag (KOMG) Needham & Co reiterates STRONG BUY. Target $40 to $44. Firm is saying that despite investor concerns, they believe industry supply and demand will remain in balance or even below requirements for much of 2006, causing their forecast for KOMG to likely require further upward revision. Given the co's execution, outlook, and likely further upward estimate revisions, they view the current level of short interest (9.7 mln by the last report) as inappropriate and a catalyst for further strength in the stock.
9:39AM CYTYC Corp (CYTC) Stanford Research reiterates BUY. Target $30 to $35. Firm believes short- to medium-term headwinds are piling up. They say the lack of Lambda platform combined with weak midsize SUVs stymie revenue growth through 2007.
9:39AM American Axle (AXL) Prudential downgrades Overweight to NEUTRAL. Target $26 to $22. Firm believes short- to medium-term headwinds are piling up. They say the lack of Lambda platform combined with weak midsize SUVs stymie revenue growth through 2007.
9:38AM DOV Pharma (DOVP) Jefferies & Co initiates BUY. Target $18. Firm believes DOVP is well positioned to maximize the economic value of its products. On the clinical and regulatory fronts, they anticipate a flow of news events in 2006 that could drive share price appreciation, including FDA approval for indiplon and Phase III data for bicifadine for chronic lower back pain.
9:38AM Casey's General (CASY) Morgan Keegan upgrades Mkt Perform to OUTPERFORM. Upgrade follows strong Q2 results, saying over the past several quarters, the co has significantly reduced earnings volatility and has reported upside to our estimates on several occasions.
9:37AM Toll Brothers (TOL) Susquehanna Financial downgrades Positive to NEUTRAL. Firm comments that co's new guidance indicates that not only has demand slowed for TOL's high-end product, but in a surprising turn, operating margins will likely be impacted significantly more than their already declining forecast implied. Without the benefit of greater details coming forth from the conference call at 2pm E.T., they suspect that the lower-than-expected guidance is being driven by more aggressive pricing in its current order stream than they had predicted.
9:36AM eBay (EBAY) Am Tech/JSA Research downgrades Buy to HOLD. Firm believes the market has fully priced in continued strength from EBAY's core franchise in 2006 and they would be taking profits at these levels. They believe that the thesis they outlined in their upgrade in May has largely played out and the Skype acquisition and GOOG competition add risk to the stock. They say Skype makes eBay more of a long-shot growth story than a proven growth engine, and they don't think they'll be able to tell if the Skype acquisition was a good idea until the middle of 2006.
9:35AM Pegasystems (PEGA) Adams Harkness initiates BUY. Target $9. Firm is saying they like the co's new "quick value" strategy and believe it is well positioned to grow, but given the shares' recent run, they would be buyers on pullbacks.
Discover What Traders Are Watching
Explore small cap ideas before they hit the headlines.
