Börsipäev 9. detsember
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Intel's Woes Could Be Good for Market
12/9/2005 9:17 AM EST"It is the working man who is the happy man. It is the idle man who is the miserable man."
-- Benjamin Franklin
When the market idles for a few days the discontent tends to rise quickly. A pause in a steady ascent rouses the struggling bears, who are quick to tell us that the market is finally coming to its senses and the end is near, the weak holders and marginal bulls quickly become nervous and start selling positions, and the serial top callers emerge once again with their pontifications.
Idle hands are the bear's playmate, especially when we have just experienced a good run. What is interesting is that so many people are quick to assume that a pause means that we are now going to head steadily lower. Perhaps it is just the wrongful application of the rules of gravity that everything that goes up, must come down.
In fact, when a market has been as strong as this one there is less chance that we will do a quick u-turn. There is a large contingent of folks out there who did not fully participate in this rally. With three weeks left in the year they are not going to sit around and hope that a big reversal does take place -- they are going to look for entry points so they can try to rack up some performance and make some money before we ring in 2006. In addition, many of those who do have gains will want to wait to ring the register until next year so they can defer taxes for a little while.
December is the seasonally strongest month of the year for a very good reason. Part of it has to do with end-of-the-year cash flows but another reason is just good old fashion human emotion, which drives us to want to complete our efforts on an upbeat note. We are all going to sit down and look at how we did for the year in a few weeks so we want to do our best to bump our investment returns a little if we can.
The market has been resting for a few days now and that is exactly what we need to set the stage for a move higher. The Intel (INTC:Nasdaq) midquarter update is playing out in a manner that is good for the market. Although the report wasn't so great, the stock had already sold off sharply before the news and is gapping down a bit this morning. I expect the weakness in Intel to be viewed as a buying opportunity, and in fact a couple of analysts have made such comments.
If Intel can help bounce the semiconductors today I expect the bulls will be refreshed from their bout of idleness and get back to work. At the moment things are looking upbeat. Asian markets were higher but Europe lower. Gold is up big once again and oil is also showing some buoyancy.
Position: Long INTC
CIBC downgrades US Steel (X 48.32) to Underperform from Sector Perform on valuation
Prudential initiates Boston Scientific (BSX 26.00) with a Neutral and $30 tgt, as they expect Taxus sales to decline over the next few years due to new competition and slowing market growth
Prudential initiates Medtronic (MDT 55.95) with an Overweight and $67 tgt, as they believe the co provides investors with a combination of above average sales and earnings growth driven by a broad range of market leading franchises in many of the fastest growing med-tech markets and a reasonable valuation
Prudential initiates Johnson & Johnson (JNJ 60.08) with an Underweight and $59 tgt as they believe the co is entering into a period of mid-to-high single digit sales and EPS growth in contrast to the double-digit growth the company achieved during the first half of the decade
Prudential initiates St Jude (STJ 51.06) with a Neutral-Weight and $58 tgt; while they believe that the good times will continue for the co for the next few years, they think the stock appears fairly valued
Prudential initiates Abbott (ABT 38.29) with a Neutral-Weight and $43 tgt, as they believe that ABT is largely past a string of recent setbacks that caused the stock to decline by over 20% since July 2005
Deutsche Bank downgrades Ciena (CIEN 3.04) to Hold from Buy on valuation
Goldman Sachs downgrades National Semiconductor (NSM 27.28) to In-Line from Outperform on valuation
Citigroup initiates XM Satellite (XMSR 27.86) with a Buy and $43 tgt, as they view satellite radio as one of the few areas within the media sector that offers attractive secular growth
Citigroup initiates Sirius Satellite (SIRI 7.42) with a Buy and $9 tgt, as they believe satellite radio is one of the few growth stories in media.
UBS downgrades IBM (IBM 87.50) to Neutral from Buy on valuation
BofA upgrades United Natural Foods (UNFI 25.37) to Buy from Neutral with a $32 tgt, as they believe the long-term prospects for sales and EPS growth are healthy due to strong industry fundamentals, Whole Foods' (WFMI) growth and improved operating efficiency
Morgan Stanley upgrades Hershey (HSY 55.25) to Equal-Weight from Underweight; although the co faces several issues (higher input costs, higher gas/energy prices), firm believes these dynamics are now largely discounted in the stock's valuation
INTC Intel mid-quarter update: Analysts weigh in
Susquehanna says it had expected Intel to raise the midpoint of its revenue forecast range, however, the co did indicate that there was some strength coming out of November and that wafer starts are running higher than expected, although some of this will be used to build inventory. Firm expects some pressure on the stock as expectations had been rising going into the call... Bear Stearns says the update was below market expectations. Although the co stated sell through is in line with seasonality, the lack of upward revision in its guidance reflects the short term chipset constraints... BofA says a pullback in the stock would represent an excellent buying opportunity -
SCSS Select Comfort: Expect upside to guidance for 7-12% comps at Q4 Interim Business Update - Wedbush (25.91 +0.15)
Wedbush notes that SCSS will provide investors with a business update for 4Q05 after market close on December 13. They expect upside to the 7-12% comp guidance for the following reasons: 1) on the Q3 earnings call, mgmt noted that Q4 started off strongly; 2) a continuation of the strong consumer response to the selection of more moderate priced beds; 3) sales incentives combined with more national media spend; and 4) other retailers reporting decent traffic over the Thanksgiving weekend which also should have benefited SCSS. Firm believe fundamentals remain strong with significant organic growth ahead as the co continues to invest in infrastructure ahead of growth -
SCSS Select Comfort tgt upped to $33 from $25 at Dougherty as firm has increased confidence ahead of co's mid-quarter update set for 12/13
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Aktsiaturg on topelt õhuke - jõulukuu ja reede(III advent tulemas). Siit võib tulla üllatusi mõlemas suunas... ise olen positiivselt meelestatud
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tänase päeva mittelikviidsuse näiteks kõlbab hästi frontmonth naftafutuuri vahemik 58.95-61.45
