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ADVO (AD / NYSE)
Bear Stearns
Downgrading from Attractive to Neutral. Management reduced guidance for fiscal 2002 (September year-end) yesterday afternoon citing weaker than expected December sales and additional security costs associated with the delivery of direct mail. Lowering F2002 EPS estimate from $2.85 to $2.50.

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Affymetrix (AFFX / Nasdaq)
Merrill Lynch
Lowering our near-term rating from Strong Buy to Buy, based on valuation.

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AK Steel Holding Corp. (AKS / NYSE)
Morgan Stanley Co.
Upgrading from Outperform to Strong Buy, with a $16 price target. We believe the company is the most attractive steel firm in our universe, as it can best leverage changes in spot market prices.

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Ashland (ASH / NYSE)
Goldman Sachs
Initiating coverage with a Market Outperformer rating. 17% upside to $52 base-case target price versus 15% 'doom and gloom' downside risk to $38

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BMC Software (BMC / NYSE)
Merrill Lynch
Adding BMC to our Focus 1 list, with a $25 price target. We believe the stock offers investors growth at a reasonable valuation.

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BMC Software (BMC / NYSE)
Prudential Securities
Pre-announced better than forecast F3Q results. Reiterating buy with new $27 price target (Up From $21). Larger deals are returning and business is picking up. We expect upcoming presentation and earnings call to be upbeat.

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BMC Software (BMC / NYSE)
Piper Jaffray
Initiating coverage with Neutral rating. 2002 is make or break time. No longer just a mainframe player.

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BMC Software (BMC / NYSE)
SG Cowen
Raising fiscal 2002 earnings estimate to $0.27 per share, but we are not yet confident this quarter's surprise growth is a sustainable trend. Maintain Neutral rating.

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Commerce Bancorp (CBH / NYSE)
Piper Jaffray
Initiating coverage with Outperform rating and $46 target. Unique business model. Expanding aggressively.

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Documentum (DCTM / Nasdaq)
Weisel Partners
Upgrading from Attractive to Buy; Pre-announces better thanexpected December quarter results; visibility improving.

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GATX Corporation(GMT / NYSE)
Piper Jaffray
Upgrade to Outperform from Neutral. Raising target from $34 to $40. Utilization has reached bottom. Telecom exposure substanially reduced. Negatives already priced in.

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Gart Sports Company (GRTS / Nasdaq)
Bank of America Montgomery
Initiating coverage with a Strong Buy rating and $25 price target. We believe the company's acquisition strategy makes GRTS the dominant growing sporting goods retailer, that should see margin expansion over the coming quarters.

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Hilton Hotels Corp. (HLT / NYSE)
Credit Suisse First Boston
Downgrading from Buy to Hold. HLT is ready for a pullback as prices have appreciated dramatically since Sept 11th. It shows a limited opportunity for multiple expansion.

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HNC Software (HNCS / Nasdaq)
Goldman Sachs
Downgrading from Outperform to Neutral. Preannounces 4Q01 results after yesterdays close. Lowering 2002 EPS from 65c to 50c reflecting guidance of 50c-55c. Compelling strategy. Transaction-based deals better-than-expected.

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Invitrogen Corporation (IVGN / Nasdaq)
Merrill Lynch
Raising our near-term rating from Buy to Strong Buy, with an $85 price target. We believe the company can post 20% growth in 2002 and has a vast array of opportunities developing in its pipeline.

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Southwest Airlines Co. (LUV / NYSE)
Salomon Smith Barney
Downgrading to Neutral from Outperform based on price. Tends to underperform cyclical majors in recovery part of cycle.

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Lawson Software(LWSN / NYSE)
Lehman Bros
Initiating coverage with a Strong Buy rating and $22 price target. The company trades at a discount to its peers in the ERP software group.

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Lubrizol Corporation (LZ / NYSE)
JP Morgan Chase & Co.
Downgrading from Buy to market perform after stock up 37%, and hit $36 Price Target over last year with earnings flat-down in that period.

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Marriott Int'l (NEW) (MAR / NYSE)
Credit Suisse First Boston
Downgrading from Buy to Hold. MAR is due for a pullback as stock price appreciated drastically since Sept 11th. Furthermore, MAR discounts improved profit growth expectations and enjoy a more limited opportunity for multiple expansion.

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Newport Corporation (NEWP / Nasdaq)
Salomon Smith Barney
Upgrade from Neutral to Buy despite last night's preannouncement. Orders flat. Cancellations slowed. May be turning the corner. Semi sales improving. Adjusted 2001 EPS from 73c to 74c and 2002 from 40c to 30c. Target up from $19 to $35.

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PMA Capital Corporation (PMACA / Nasdaq)
Credit Suisse First Boston
Initiating coverage with a Strong Buy and a $27 price target. PMACA represents extraordinary value relative to it's peers.

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Prudential Financial(PRU / Nasdaq)
Bear Stearns
initiating with Neutral, based on our peer group valuationanalysis, including a price-to-book to ROE regression, we arrive at a 12-month price target of $34 per share, whichindicates less than 10% upside potential.

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Qualcomm (QCOM / Nasdaq)
Lehman Bros
Trimming 2002 EPS estimate to $1.06, because of lower expected wireless subscriber growth. Maintain Strong Buy rating and $65 price target.

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Qualcomm (QCOM / Nasdaq)
ABN Amro
Downgrading from BUY to ADD and lowering our target from$65 to $56 as we have concerns about near-term slowdown in the growth of wireless subscribers and handset shipments, including results from China.

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Scientific-Atlanta (SFA / NYSE)
ABN Amro
upgrading from HOLD to BUY and establishing a $35 pricetarget as we believe the worst is behind us and 2002 market conditions are stabilizing in North America.

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USA Education (SLM / NYSE)
Goldman Sachs
Upgrade from Neutral to Outperform. Attractive valuation, strong earnings prospects and a successful business model makes this a compelling entry point. Target $95.

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Simplex Solutions (SPLX / Nasdaq)
Robertson Stephens
Downgrade to Neutral from Buy. Preannounces 1Q02 shortfall. Reducing estimates to -31c from 25c for 2002. Target lowered to $17 from $20.

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Sequenom (SQNM / Nasdaq)
Robertson Stephens
Downgrade from Strong Buy to Buy as target of $12 is approached. First half of 2002 expected to be quiet.

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Tesoro Petroleum Corp. (TSO / NYSE)
Goldman Sachs
Initiating coverage with a Recommended List rating. Our $18 base-case target price equates to 35% upside from current levels versus our calculated 17% downside risk to an $11 'doom and gloom' trading low.

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Tyco Int'l. (NEW) (TYC / NYSE)
Prudential Securities
Initiate with a hold; shares likely to be locked in extended consolidation from low to mid $50s. Believe FY03 EPS and cash flow growth likely to slow to 10%-15% from 20%-25% expected for FY02.

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UAL Corporation (UAL / NYSE)
Goldman Sachs
Upgrading to Outperform from Neutral. Fundamentals have improved in line with the industry, yet its stock price has lagged.

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Valero Energy Corp. (VLO / NYSE)
Goldman Sachs
Upgrading to Recommended List given our favorable view of the UDS acquisition, its compelling undervaluation, high free cash generation, growth focused management with proven track record.

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VeriSign (VRSN / Nasdaq)
Dain Rauscher
Price weakness following acquisitions offers a buying opportunity.

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VeriSign (VRSN / Nasdaq)
Lehman Bros
Downgrading from Strong Buy to Buy, with a $40 price target. We believe the company will have trouble meeting its goal of 35-40% organic growth.

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Apple Computer (AAPL / Nasdaq)
Prudential Securities
Steve Jobs presented at MacWorld Conference; given the timing of new product availability (only the high-end iMac will be available by month's end), we are cautious on the company's ability to drive a significant new product cycle in the face of seasonal weakness in CQ102. Take profits.

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AmerisourceBergen Corp. (ABC / NYSE)
JP Morgan Chase & Co.
Reiterate Buy, after recent selloff, which we think was overdone. Company dinner last night reinforced that fundamentals are strong, and management team is highly focused.

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Affiliated Computer Svcs. (ACS / NYSE)
SG Cowen
Raising price target to $122 per share, because of higher contribution from the business services business. Reiterate Buy rating.

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AFLAC (AFL / NYSE)
NEWS
announced it expects to report 4Q operating earnings of about 34c/share, in-line with current consensus earnings estimates. The company expects to achieve 15% to 17% growth in operating earnings per share before currency translation in 2002 and 2003.

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Altera Corp. (ALTR / Nasdaq)
Prudential Securities
Reiterate Buy rating; preannounced Q4 revenues will decline 7% sequentially, or exactly the middle of its guidance of down 5%-10% sequentially. Bookings have been strong in November and December which indicates that Q4 should be the bottom.

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Altera Corp. (ALTR / Nasdaq)
Bank of America Montgomery
Reducing estimates to meet the company's new guidance. We now expect the company to earn $0.23 per share in 2002 and $0.47 for next year. Maintain Market Performer rating, as we expect margins to contract during the coming months.

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AOL Time Warner (AOL / NYSE)
Deutsche Banc Alex Brown
Trimming 2002 EBITDA estimates to meet the company's new guidance, although the cuts do not come as a complete surprise. We like new CEO Parson's conservative outlook for AOL, and believe the company can post double-digit annual growth for the long-term. Reiterate Strong Buy rating and $41 price target.

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AOL Time Warner (AOL / NYSE)
Prudential Securities
Maintaining Buy rating but taking our price target to $43 from $49. Even on lower estimates, we believe the stock looks relatively inexpensive when compared to valuations of otherconglomerates.

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AOL Time Warner (AOL / NYSE)
ABN Amro
Maintain ADD rating, but lowering price target from mid $40s to high $30s, our 2001 EPS estimate from $1.16 to $1.15 and 2002 from $1.24 to $0.90, which still suggests attractive 15% upside from current levels.

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AOL Time Warner (AOL / NYSE)
JP Morgan Chase & Co.
Reiterate Buy, but lowering estimates and price target. Lowering 02E/03E cash EPS from $1.24/$1.57 to $0.72/$0.95, 02E/03E EBITDA from $11.4B/$13.2B to $10.2B/$11.8B. Lowering price target from $40 to $38 on 10% reduction in EBITDA estimates.

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AOL Time Warner (AOL / NYSE)
SG Cowen
Lowering EPS estimates to $1.98 for 2001 and $2.16 for next year. Subscription growth will continue to be the major driver in 2002. Maintain Strong Buy rating.

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Franklin Resources (BEN / NYSE)
Deutsche Banc Alex Brown
Raising fiscal 2002 EPS estimate to $1.90, based on evidence that retail investors re-pledged money into mutual funds during the fourth quarter.

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Brocade Communications (BRCD / Nasdaq)
ABN Amro
stock still has further upside, raising target from $40 to $45-$50

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Caterpillar (CAT / NYSE)
Morgan Stanley Co.
We believe the EPA's announced non-compliant engine penalties could effect EPS by up to $1 in 2002. Any major effect to CAT should be limited to the near-term. Maintain Outperform rating, and we'd be aggressive buyers in the mid $40's range.

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Circuit City Group (CC / NYSE)
Robertson Stephens
Raising 2001 EPS to 93c from 89c and 2002 EPS to $1.20 from $1.02. Better-then-expected sales trend. Upside already priced in. Raising target from $22 to $30.

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Circuit City Group (CC / NYSE)
Morgan Stanley Co.
Raising estimates and price target to $35 per share. We now expect the company to earn $0.95 per share in fiscal 2001, based on strong December comp sales. Reiterate Outperform rating.

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Coach (COH / NYSE)
Lehman Bros
Increasing price target to $48 per share, based on increased confidence in the company's ability to meet it holiday quarter expectations. Reiterate Strong Buy rating.

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Compaq Computer Corp. (CPQ / NYSE)
Deutsche Banc Alex Brown
Raising estimates and price target to $14 per share. We are almost certain that robust consumer PC sales led to the company's positive pre-announcement yesterday, and now expect CPQ to earn $0.15 in 2002 and $0.40 for next year. Reiterate Buy rating.

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Compaq Computer Corp. (CPQ / NYSE)
Bear Stearns
Reit Neutral rating owing to Compaq's weak business model and its lack of consistent execution. Raising our 4Q01 EPS estimate from ($0.07) to $0.03 on revenues of $8 billion. Raising 2002 estimate from ($0.15) to $0.30 on revenues of $31.6 billion(down 5% Y/Y and up from our previous estimate of $28.7 billion.

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Compaq Computer Corp. (CPQ / NYSE)
Morgan Stanley Co.
Raising calendar 2002 estimates to a profit of $0.33 per share, on revenue of $33.2 billion. Reiterate Outperform rating.

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Compaq Computer Corp. (CPQ / NYSE)
SG Cowen
Raising fiscal 2001 EPS estimate to $0.10, after the company pre-announced positive fourth quarter results. Reiterate Buy rating, as the stock is trading at a 22% discount to the HWP merger offer.

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Charles River Laborator. (CRL / NYSE)
Lehman Bros
Raising fiscal 2002 EPS estimate to $1.17, matching the company's new guidance.

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EOG Resources (EOG / NYSE)
Lehman Bros
Trimming fourth quarter earnings estimate to $0.10 per share, to reflect modest production cuts. Maintain Market Perform rating, as commodity prices for natural gas should remain weak.

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Electronic Arts (ERTS / Nasdaq)
Lehman Bros
We believe the company will surpass the consensus EPS estimate this quarter, as the company shipped many popular games for the new video game consoles.

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Extreme Networks Inc (EXTR / Nasdaq)
Bank of America Montgomery
Raising our estimates and price target to $20 per share, after the company expressed confidence with current EPS estimates. We now expect EXTR to earn $0.08 in 2002 and $0.25 for next year. Maintain Buy rating.

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First Data Corporation (FDC / NYSE)
Merrill Lynch
Raising price target to $110 per share, as we believe the stock should command a higher P/E multiple. We also believe FDC may raise its 2002 earnings guidance later this month. Reiterate Strong Buy rating.

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Hughes Electronics Corp. (GMH / NYSE)
Morgan Stanley Co.
We believe fourth quarter DBS customer adds were 375,000- much better than expected- following our extensive retail study. Maintain Outperform rating.

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General Motors Corp. (GM / NYSE)
Bank of America Montgomery
Raising 2002 earnings estimate to $2.50 per share. We believe the compan's $1,000 incentive to previous truck owners will help drive market share gains this year. Maintain Market Performer rating.

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Gateway (GTW / NYSE)
Deutsche Banc Alex Brown
Raising EPS expectations, to match the company's new 2002 guidance. We now expect GTW to earn $0.15 per share, although revenue will only be $4.9 billion. Maintain Buy rating.

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Gateway (GTW / NYSE)
Lehman Bros
Lowering our calendar 2002 EPS estimate to $0.15, despite the company's positive pre-announcement. Pricing was stronger than expected, but unit growth was particularly weak in the current quarter. Maintain Market Perform rating.

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Gateway (GTW / NYSE)
NEWS
reaffirmed previous guidance that it expects to return to profitability for the 4Q on a pre-tax income basis, excluding special charges, thanks to higher than expected average unit prices, and aggressive cost-cutting efforts

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Gateway (GTW / NYSE)
Goldman Sachs
Preannounces a severe top-line shortfall, though with EPS slightly above expectations. 15% sequential unit decline. Decent but unspectacular holiday sales. Raising 4Q EPS from -1c to 1c and 2001 EPS from -22c to -20c.

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Harley-Davidson (HDI / NYSE)
Lehman Bros
The company will likely beat the consensus estimate for this quarter by a penny or two. Warm weather helped sales, which have remained strong, despite the slowing economy.

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Int'l Business Machines (IBM / NYSE)
ABN Amro
Remains our top pick as we believe its current multiple does notreflect their strong competitive and financial prospects.

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L-3 Communications Hldgs. (LLL / NYSE)
NEWS
announced that it has acquired privately-held SY Technology, Inc. for approximately $48 million in cash, plus additional considerations contingent on its financial performance for 2002 and 2003. The acquisition is seen as highly accretive to L-3's 2002 earnings.

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L-3 Communications Hldgs. (LLL / NYSE)
SG Cowen
Raising fiscal 2002 estimate to $3.62 per share, based on a recent accretive acquisition. Reiterate Strong Buy rating.

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Millennium Pharmaceutical (MLNM / Nasdaq)
SG Cowen
Widening loss estimates to reflect the company's new guidance. We now expect MLNM to lose $0.58 per share in fiscal 2002. Maintain Buy rating, based on the company's solid long-term prospects.

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Riverstone Networks (RSTN / Nasdaq)
SG Cowen
Raising price target to $24 per share, after the company secured a $15-$25 million contract overseas. Maintain Buy rating, and our confidence in earlier EPS estimates.

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SPX Corporation (SPW / NYSE)
Bear Stearns
We believe that SPW may prospectively be a candidate for inclusion into the S&P 500 index over the next two years. This could drive substantial upside to SPW's share price. SPW appears to meet all of S&P's criteria for inclusion. Reiterate Buy and $175 price target.

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Triton PCS Holdings (TPC / NYSE)
Morgan Stanley Co.
Reducing price target to $40 per share, after the company missed our fourth quarter subscriber growth estimate by 20%. Maintain Outperform rating.

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T. Rowe Price Group (TROW / Nasdaq)
Deutsche Banc Alex Brown
Raising fourth quarter estimate to $0.34 per share, because of higher expected asset inflows. Maintain Market Perform rating.

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TranSwitch Corporation (TXCC / Nasdaq)
NEWS
announced that 4Q net revenues will be approximately $4.5 million and its pro-forma diluted loss per share will be (-11c) to (-13c). The estimate was for a loss of (-12c).

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United Auto Group (UAG / NYSE)
Bank of America Montgomery
Raising price target to $28 per share, as we believe the stock will see its P/E multiple expand this year. UAG is well positioned in the auto dealership market to post double-digit annual EPS growth. Reiterate Buy rating.

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XM Satellite Radio Hold. (XMSR / Nasdaq)
Lehman Bros
We believe the market over-reacted to the company's subscriber update yesterday. Reiterate Strong Buy rating.

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XM Satellite Radio Hold. (XMSR / Nasdaq)
Morgan Stanley Co.
Raising price target to $17 per share, based on higher than expected fourth quarter subscriber additions. Reiterate Outperform rating.

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Morgan Stanley Co. (Computer Hardware)
A check with nearly 500 channel contacts shows a bearish outlook. PC pricing remains aggressive, down about 15% year/year, and inventories have been staying flat.

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Goldman Sachs (airlines)
Better traffic means narrower than expected 4Q losses. Declining oil prices offseting increases in insurance and security. Narrowing estimates of 4Q losses by avg. of 10% for most airlines.

Merrill Lynch (Wireless)
Downgrading our opinion on the sector to Underweight, based on valuation. Our wireless index has risen by 78% since October 1st. We believe infrastructure spending will fall 5% in 2002, and ERICY is most susceptible to this decline.

Weisel Partners (wireline equipment)
Expect bearish fundamentals in 1H'02; Believe 2H'02 growth already discounted. We favor CSCO, NT, ONIS & TELM; JNPR & CIENrepresent longer-term opportunity

Lehman Bros (Chip Equipment)
Our early indications show that capital spending will decline another 30% in 2002. The sector will likely not recover until the end of this year.

Lehman Bros (Specialty Chemicals)
The stocks in this sector are trading at a dangerous premium to the expected earnings for this year. We believe the valuations are susceptible to fall during the coming earnings season.

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Oscillator: 5.4

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10:00 a.m. Factory Orders (Nov) -2.7%

3:00 p.m. Consumer Credit (Nov) $4.9B

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Allstate Meeting (sponsored by BAC)

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Apollo Group Field Trip (sponsored by CSFB)

Neiman Marcus Group (sponsored by BAC)

HRB Analyst Meeting

Meeting with SXC Management (sponsored by DB)

MacWorld Conference & Expo

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