More a

02.13.06 Morning report

INVESTORS HAVE BEEN FIXATED on Google the past few weeks, as its shares have tumbled nearly 25% from a peak of $475 -- and the fact is, there could be a lot more tumbling ahead. The share price could well be cut in half over the next year as the Internet giant grapples with growing competition from Microsoft and Yahoo!, increased pricing pressures in its online ad sales and mounting concern about what's known as click fraud.


Suffice it to say, there are those who disagree: Fans insist that Google (ticker: GOOG) is headed to $500, maybe even $2,000. But the list of challenges the company faces is nothing short of mind-googling. As if Microsoft weren't enough, the search concern is headed for brawls with content providers like newspaper and book publishers. Phone and cable firms may also join the fray. Google's cost structure, meanwhile, is ballooning, with the company hiring thousands of new workers and mulling projects as far afield as space travel. If Google trips on even a few of the challenges, its earnings could easily disappoint.


Though this exercise is less than scientific, it clearly demonstrates two things. First, Google's business has tremendous leverage -- changes in revenue, in either direction, have outsized impacts on the bottom line. That's the result of high profit margins: 88% of net revenue and 58% of gross revenue. Second, the exercise provides a glimpse of the risk posed by a lofty stock multiple


DOCTORS HAVE COMPUTERIZED THEIR PRACTICES at a rate I find hard to describe: Unhurried? Sluggish? Snail-paced? Enter your doctor's office and the administrator still hands you a clipboard, stacked with paper forms for you to bring up to date. Errors in medical records cause a significant share of pain and spending, so a couple of years ago I wrote hopefully about electronic-prescribing products from vendors like Allscripts Healthcare Solutions ("Here Come e-Pills," May 17, 2004). I'm even more hopeful now.




Success came slowly to the little Chicago-based company (ticker: MDRX), but it has become a growing supplier of software for all sorts of medical record-keeping, doubling its shares from a 2004 level of 8 bucks, to a recent 17. Hospital suppliers of health-care information technology like Cerner (CERN) have also seen their shares double, as the medical industry becomes -- at long last -- automated.



We are adding a pennystock picks to our site this week.

AMMX Last Friday Shares zoomed from .08 to .20 We hear rumours of big things about to happen. Could bee a big winner this week.




BTEM We pick up some shares at 3 last week and look for the stock to move in march. It could be a winner in the stem cell sector. They are one of the few profitable stem cell banks

NASDAQ

KEYW GOING higher on heavy volume. Traded big volume for KEYS on Friday up to 22.50. Look for 23 or so this week

European Markets:

In early morning trading:

CAC40: up 0.32%;

DAX: up 0.37%;

FTSE100: up 0.26%;

Sector News:

XAL - With the upgrades in the airline sector by Lehman the XAL breaks 20 day MA at $52 next resistance is $52.50, then $54. Lehman upgraded LCC, which breaks out at $31.50, and they also upgraded UAUA, UAL and LCC. Goldman Sachs upgraded SkyWest SKYW;

Breaking News:

~CHK - COO has resigned;


~Merrill is in talks to acquire a stake in money manager BlackRock for $8 billion, in a deal that would create a $1 trillion fund-management colossus and transform the nation's largest retail brokerage firm.

~Russia may loosen its state monopoly on gas exports, the country said at a G-8 meeting with a focus on energy security.

~RIG - Received $800M in contracts

~APCR - Files 6M share secondary which is 18% of the float

~CMED - Up this morning on good earnings;

Upgrades

• Ticker Company Brokerage Firm Ratings Change Price Target
  
• WDC Western Digital Matrix Research Hold » Strong Buy
  
• RELL Richardson Elec William Blair Mkt Perform » Outperform
  
• DTV DIRECTV Bernstein Underperform » Mkt Perform $16
  
• NT Nortel Prudential Neutral » Overweight
  
• SYNP Synplicity Needham & Co Hold » Buy
  
• OXY Occidental Petro AG Edwards Hold » Buy $100
  
• ACMR AC Moore Oppenheimer Neutral » Buy
  
• AEC Associated Estates KeyBanc Capital Mkts / McDonald Hold » Buy $12
  
• CBB Cincinnati Bell Morgan Stanley Underweight » Overweight
  
• FNF Fidelity National Goldman Sachs In-Line » Outperform
  
• POM Pepco Hldgs Soleil Hold » Buy $25.50 » $26.50
  
• WTSLA Wet Seal Brean Murray Hold » Accumulate $4 » $7
  
• STTS STATS ChipPAC UBS Neutral » Buy
  
• REG Regency Centers UBS Reduce » Neutral
  
• GGP Gen Growth Prop UBS Reduce » Neutral
  
• COL Rockwell Collins UBS Neutral » Buy
  
• ACI Arch Coal JP Morgan Underweight » Neutral
  
• SPG Simon Properties UBS Neutral » Buy
  
• KIM Kimco Realty UBS Neutral » Buy
  
• EIX Edison Jefferies & Co Hold » Buy $48
  
• TXU TXU Corp Jefferies & Co Hold » Buy $55
  
• WTI W&T Offshore Lehman Brothers Equal-weight » Overweight $37 » $50
  
• AMLN Upgraded by Merrill
  
• PCLM Piper believes the shares are undervalued
  
  
  
  
  
  
• CCL Carnival Matrix Research Buy
  
• ALNY Alnylam Pharmaceuticals Needham & Co Buy $15
  
• MGAM Multimedia Games Brean Murray Strong Buy $15
  
• HURN Huron Consulting(b;) Deutsche Securities Buy
  
  
  
  
  
• BID Sotheby's JMP Securities Strong Buy $22 » $25
  
• OPEN Open Solutions JMP Securities Strong Buy $27 » $31
  
• ISIS ISIS Pharm Needham & Co Buy $7 » $10
  
• HR Healthcare Realty Ryan, Beck & Co Mkt Perform $35 » $36.50
  
• GOL Gol Intelligent Airlines Calyon Securities Buy $35 » $37
  
• CYT Cytec Jefferies & Co Buy $55 » $62
  
• CRL Charles River Jefferies & Co Hold $46 » $50
  
• CHS Chico's FAS Banc of America Sec Buy $48 » $49
  
• RA Reckson Assc Rlty Banc of America Sec Buy $38 » $39
  
• TASR TASER Jefferies & Co Buy $7 » $12
  
• CHB Champion Ferris Baker Watts Buy $16.50 » $18.50

Downgrades

• Ticker Company Brokerage Firm Ratings Change Price Target
  
• PXD Pioneer Natural RBC Capital Mkts Outperform » Sector Perform
  
• AMR AMR Corp Lehman Brothers Overweight » Equal-weight
  
• ZQK Quiksilver JP Morgan Overweight » Neutral
  
• KTO K2 JP Morgan Overweight » Neutral
  
• SGY Stone Energy Morgan Stanley Equal-weight » Underweight
  
• RRI Reliant Energy Citigroup Buy » Hold
  
• BPO Brookfield Pptys Banc of America Sec Buy » Neutral $30
  
• COLM Columbia Sportswear JP Morgan Neutral » Underweight
  
• TR Tootsie Roll Industries Stifel Nicolaus Buy » Hold $35
  
• MEOH Methanex CIBC Wrld Mkts Sector Outperform » Sector Perform $24
  
• SBUX Starbucks UBS Buy » Neutral
  
• SGY Stone Energy Lehman Brothers Equal-weight » Underweight
  
• EXAR Exar Matrix Research Strong Sell
  
• INTU Cut to reduce at UBS