Analyst Actions: Broadcom, Texas Instruments, Intel, Fox Entertainment
Credit Suisse First Boston lowered the boom on three big-name tech stocks, downgrading them due to fairly pervasive visibility worries. Broadcom (BRCM), Texas Instruments (TXN) and Intel (INTC) were all snipped by analyst Charles Glavin, just one day after semiconductors rallied in the wake of last week's selloff.
"We believe a substantial 2001 is unlikely for Intel," Glavin wrote, downgrading the blue-chip chipmaker to hold from a buy. He also slashed his price target to $33 from $40, which is pretty bad news for Intel, considering it closed above that mark -- at $34.56 -- yesterday.
None of the other companies were spared the rod, however. Glavin also had strong words and decisive action for Texas Instruments (TXN). He cut the stock to hold from buy, cut its price target to $35 from $45 and essentially said it was overvalued. Yesterday, TI closed at $37.70.But Broadcom, which was cut to hold from buy and given an $80 price target, $95 lower than the previous target, took the harshest criticism. "We are downgrading our rating and price target based on impaired visibility in terms of end market growth and customer demand," he wrote. Glavin said the company's problems included "excess inventories at major networking and cable modem OEMs [original equipment manufacturers], a looming gigabit Ethernet price war, digesting acquisitions and the affects of aggressively courting customers." Just last week, CSFB issued a dire note about the semiconductor industry after some new data from the Semiconductor Industry Association showed that chip sales are falling. That report said sales were down 6% in the Americas in the period from the third quarter to the fourth quarter, and they have dropped 3% worldwide. Normally, sales had increased 5% quarter-over-quarter. At that time, Credit Suisse First Boston said inventory levels have worsened in recent months and could likely take until the end of the second quarter to burn off. Upgrades
- Avici Systems (AVCI): NEW intermediate-term neutral, long-term accumulate. "The unprofitable nature, high customer concentration, new product architecture and fierce competition means that Avici should have a tough road ahead," the analysts said. Extreme Networks (EXTR): NEW accumulate; price target: $48. "Extreme Networks ranks first in port shipments for layer 3 ethernet switching." Juniper Networks (JNPR): NEW accumulate; price target: $110. "Juniper Networks has emerged as one of the leading companies in the high-end router space."
- Cablevision Systems (CVC): NEW strong buy; price target: $108. "The company benefits from superior demographics, tremendous scope, and an enviable portfolio of locally focused sports content." Charter Communications (CHTR): NEW buy; price target: $27. "2001 will be a year of both opportunity and challenge." Comcast (CMCSK): NEW strong buy; price target: $55. "Comcast is poised to deliver increasing returns over the next five years." Cox Communications (COX): NEW strong buy; price target: $56. "Cox is one of the best operations in the industry." First Data (FDC): NEW buy; price target: $75. "The company is also well positioned to participate in developing Internet-based payments industry."
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