From Briefing.com: 4:20 pm : Though caught within a tight trading range from open until close, the equity market's major averages managed to sustain positive footing following yesterday's broad-based, Fed-induced rally with which they rang in 2006. Gains were modest, but buyers nonetheless dominated trading.
Nine of the ten economic sectors closed higher. Extending yesterday's 2.0% run, the Technology sector served as the broader market's best source of support and further substantiated the Over Weight rating Briefing.com maintains on the sector. A surging internet consulting and services industry teamed with relative strength in the communication equipment, semiconductors, and electronics industries in driving a weighty 1.1% gain. On a related note, rising Google (GOOG 445.56 +10.33) shares, following an analyst upgrade and another price target hike, helped to underpin a sense of bullishness across the tech board -- while fueling the Nasdaq's outperformance. Prolonged pharmaceutical strength helped Healthcare register a market-lifting 0.8% gain, and an upped price target on, and positive analyst comments regarding, Colgate-Palmolive (CL 55.56 +0.65) aided the Consumer Staples sector (+0.2%) in clearing the flat line. Solid earnings from Monsanto (MON 80.86 +0.26), meanwhile, helped pull the Materials sector (+0.6%) north.
Rocky energy price action served as somewhat of a bearish backdrop today. The commodity surged to a two-month high yesterday, pulled back this morning, but eventually returned from the red and closed at $63.10 per barrel. At the same time, its rise did little to spark aggressive buying within the Energy sector (+0.5%). Traders may have stuck closer to the sidelines considering Tuesday's 4.5% jump an ahead of the EIA's inventory stats that have been postponed until tomorrow. The crude action joined particular weakness in home improvement retail in stunting the Discretionary sector (0.0%). J.P. Morgan downgraded Lowe's (LOW 66.24 -0.83) shares, and its citation of a cautious outlook on the macro housing environment sent Home Depot (HD 40.46 -0.78) spinning in sympathy. While automakers' December same-store sales reports were dismal, a market that appeared to have expected worse sent the auto industry north. Apparel also emerged as a pocket of Discretionary support.
Just as gains were modest, so were losses. The Financial sector (-0.2%) stood solo in the red, and a halving of its intra-day decline helped the indices close at the high end of the session's range. Ultimately, though, the submerged status of the marker's most influential sector capped an overall advance. Banks, which rallied yesterday following a bullish interpretation of the December 13 FOMC minutes, lost steam on account of Citigroup's (C 48.44 -0.85) downgrade. Bank of America cited industry concerns; as a result, one of the S&P's heaviest issues slumped and took its peers down with it. Strength in insurers and a somewhat steepening yield curve, following last week's inversion, helped limit the sector's slide. Since the release of yesterday's minutes, which said the number of remaining rate hikes would "probably not be large," the spread between the two and 10-year notes has widened nearly six basis points.
Separately, today's economic calendar delivered an expected 2.5% increase in November factory orders. Strong aircraft orders were behind the rise; excluding transportation, orders were flat.
DJ30 +32.74 NASDAQ +19.72 SP500 +4.66 NASDAQ Dec/Adv/Vol 1159/1891/1.95 bln NYSE Dec/Adv/Vol 951/2401/1.83 bln
4:15PM Xilinx raises December quarter sales guidance (XLNX) : Co announces that Dec qtr sales are expected to increase approx 11-12% sequentially driven by broad based end market strength and strong sales growth in North America, Asia Pacific, and Europe. This is an increase from prior guidance of up 4-8% sequentially, given on Dec 7.
4:05PM Palm announces its Treo 700w Smartphone is available on the Verizon Wireless network (PALM) 33.95 +0.90 : PALM says the Treo 700w is the first Microsoft Windows Mobile-based Treo smartphone on the Verizon (VZ) EV-DO Network; phone and network offer high-speed wireless data access for email, Web browsing and downloading MSFT Office documents.
2:36PM C-COR.net announces it is comfortable with the Q2 First Call revenue and earnings estimates (CCBL) 5.45 +0.41 : CCBL reported that for 2Q06, it is comfortable with the First Call estimates in terms of revenues and earnings. CCBL expects to meet non-GAAP earnings as well as revenues, which is within the guidance that the co had given for revenues.
10:04AM NVIDIA climbs into new-3-1/2 year territory as it surpass the November high of 38.50 (NVDA) 38.80 +0.59 :
8:47AM Silicon Image delays earnings release to Feb 16 (SIMG) 9.89 : Co will report earnings on Feb 16, normally reports Q4 EPS in late Jan. Co is delaying "in order to allow its newly appointed financial management sufficient time to complete its analysis of the financial results for 2005, including its analysis of deferred tax assets as of December 31, 2005".
11:36 am Tweeter Home Entertainment Group (TWTR)
5.39 -0.06: Less than a week after outlining a number of material weaknesses in its internal controls, Tweeter Home Entertainment Group wasted little time in reminding Wall Street about one of its strengths sales. Tweeter, which sells audio and video equipment in stores under the Hillcrest, Showcase and other brands, said total Q1 revenues rose 4% to $267 mln, up from $258 mln a year ago and above the Reuters Estimates consensus of $260.3 mln.
While 4% growth isn't earth shattering by any means, as competitors like Best Buy (BBY) and Circuit City (CC) have recently enjoyed quarterly revenue growth of 10.4% and 16.5%, respectively, it could be a step in the right direction for a company trying to get back in the black. Tweeter has posted a loss in seven of its last nine quarters, with its seasonally strong fiscal first quarter acting as the company's only profitable period.
According to CEO Joe McGuire, management is very pleased with their ability to not only achieve sales momentum from last quarter but also maintain a stable gross margin rate. McGuire added that, "Consumer excitement about digital television is proving to be a significant traffic driver in our stores," as revenue from flat-panel television sales grew 47%, compared to a year ago with a 64% increase in unit sales. Further, Tweeter finished the quarter with approximately $130 mln of inventory on hand, better positioning the company for the month of January, which has become an important month for TV sales.
While Tweeter wont to release its full results for the quarter until Jan. 26, with Reuters estimating earnings of $0.26 per share, today's better than expected sales results may underscore managements ongoing efforts to improve product offerings, which should enable a return to profitability over the next 18-24 months.
--Brian Duhn, Briefing.com
11:36 am Tweeter Home Entertainment Group (TWTR)
5.39 -0.06: Less than a week after outlining a number of material weaknesses in its internal controls, Tweeter Home Entertainment Group wasted little time in reminding Wall Street about one of its strengths sales. Tweeter, which sells audio and video equipment in stores under the Hillcrest, Showcase and other brands, said total Q1 revenues rose 4% to $267 mln, up from $258 mln a year ago and above the Reuters Estimates consensus of $260.3 mln.
While 4% growth isn't earth shattering by any means, as competitors like Best Buy (BBY) and Circuit City (CC) have recently enjoyed quarterly revenue growth of 10.4% and 16.5%, respectively, it could be a step in the right direction for a company trying to get back in the black. Tweeter has posted a loss in seven of its last nine quarters, with its seasonally strong fiscal first quarter acting as the company's only profitable period.
According to CEO Joe McGuire, management is very pleased with their ability to not only achieve sales momentum from last quarter but also maintain a stable gross margin rate. McGuire added that, "Consumer excitement about digital television is proving to be a significant traffic driver in our stores," as revenue from flat-panel television sales grew 47%, compared to a year ago with a 64% increase in unit sales. Further, Tweeter finished the quarter with approximately $130 mln of inventory on hand, better positioning the company for the month of January, which has become an important month for TV sales.
While Tweeter wont to release its full results for the quarter until Jan. 26, with Reuters estimating earnings of $0.26 per share, today's better than expected sales results may underscore managements ongoing efforts to improve product offerings, which should enable a return to profitability over the next 18-24 months.
--Brian Duhn, Briefing.com
10:07 am Google: Bear Stearns upgrades Peer Perform to Outperform. Target $550. Upgrade reflects firm's long term belief in the fundamentals & the burgeoning Google Ecosystem. They believe the co is in the midst of nurturing its own Ecosystem, much like MSFT and IBM did in the past. The firm says that the co's Ecosystem has 5 main attributes: GOOG's size is developing new sectors as a derivative; GOOG's direction & partners should have a resounding effect on existing companies; the Ecosystem should act as selfreinforcing to the co; GOOG's hardware competency is underrated, and a significant advantage; and the Ecosystem growth should create an economic "lift" for GOOG.
10:04 am Computer Prgms & Syst: Leerink Swann initiates Outperform. Data from a recent AHA survey leads them to believe this underpenetrated market segment is likely to accelerate spending on clinical I.T. near term, as rural hospitals hope to achieve better patient care and higher levels of profitability, which they think could lead to positive earnings revisions by CPSI, driving share price outperformance.
09:46 am Kennametal: KeyBanc Capital Mkts / McDonald upgrades Hold to Buy. Firm is saying they are confident that the newly appointed C.E.O. Carlos Cardoso will focus on executing the strategy that has made KMT a mkt leader in the cutting tools and engineered components.
09:45 am Mahanagar Telephone Nigam: Goldman Sachs downgrades In-Line to Underperform . Downgrade is based on 1) B.S.N.L.'s surprise reduction to fixed-line monthly tariffs to Rs180 from Rs250 previously, which may pressure MTE to do so also and 2) potential 16% downside risk to their D.C.F. valuation. They believe their earnings estimates & valuation face significant downside risk from potential reduction to fixed-line monthly rentals.
09:44 am Sunrise Assisted: Citigroup initiates Buy. Target $44. Firm believes the "private pay" senior living sector fundamentals continue to improve evidenced by increasing occupancy and better pricing/sector margins. Demand growth for senior living is currently outpacing new capacity additions.
09:43 am California Pizza: KeyBanc Capital Mkts / McDonald downgrades Aggressive Buy to Buy. Target $40 to $40. Downgrade reflects the impact of stock-based compensation expense on EPS and growing concerns over the sustainability of outsize comparable same store sales performance.
09:35 am Progenics Pharm: Brean Murray reiterates Strong Buy. Target $30 to $30. Firm is saying that remaining near-term catalysts include release of final, confirmatory Phase 3 data of subcutaneous M.N.T.X. in advanced medical illness by this month, initiation of a Phase 2 trial with oral M.N.T.X. in more than 100 patients by 1H06, and receipt of an S.P.A. and subsequent Phase 3 initiation in P.O.I. in mid-2006.
09:33 am SiRF Technology: Longbow initiates Neutral. Firm is saying they expect strong growth in the Global Positioning System market based on their survey work and the low penetration rate of GPS devices across various platforms. However they think that at 38x CY06 EPS, SiRF's valuations are towards the expensive end even after accounting for its growth prospects.
09:32 am Superior Well Services: RBC Capital Mkts initiates Sector Perform. Target $33. Firm believes SWSI is an attractive candidate for small cap portfolios, particularly on any pull-back to the low $20's driven by: 1) their positive view on the pressure pumping market into 2007 - SWSI is the only small/micro cap pressure pumping pure-play; 2) Organic prospects should allow SWSI to grow its business above the industry average; and 3) Strong management team.
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