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Street Talk: Intel chipper
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November 2, 2000: 11:03 a.m. ET
Analysts bolster chip maker; cut WorldCom and Nortel; raise Global Marine
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NEW YORK (CNNfn) - Analysts Thursday made up for their recent rough treatment of the semiconductor sector, reassuring investors about industry bellwether Intel.
On the other hand, they also piled more grief on beleaguered WorldCom and Nortel Netowrks.
Merrill Lynch reiterated its "accumulate" rating on chip maker Intel (INTC: Research, Estimates) after the company said Tuesday it would meet its sale growth forecasts for the fourth quarter.
Lehman Brothers and Credit Suisse First Boston reiterated their "buy" ratings for Intel. Lehman Brothers said it was pleasantly surprised that Intel saw decent sales in Europe and Asia.
WorldCom, Nortel
Analysts were less kind to two companies suffering lately from revenue and stock-price woes: telecom service provider WorldCom (WCOM: Research, Estimates) and telecom networking company Nortel Networks (NT: Research, Estimates).
Morgan Stanley Dean Witter cut WorldCom to "neutral" from "outperform," a day after the company lowered its earnings and revenue guidance and said it was considering splitting itself into two companies.
Goldman Sachs cut its 2000 earnings estimate for WorldCom to $1.60 a share from $1.83 and its 2001 estimate to $1.45 from $1.90.
And SG Cowen downgraded Nortel Networks to "buy" from "strong buy" after the company lowered its first-quarter earnings guidance Wednesday. Last week, Nortel started an avalanche in the fiber-optics sector by reporting a revenue shortfall in its third-quarter results.
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Merrill Lynch also raised its medium-term rating and increased its earnings-per-share estimates for oil service company Global Marine (GLM: Research, Estimates).
Merrill raised Global Marine to "buy" from "accumulate," boosted its 2000 earnings estimate to 64 cents a share from 60 cents and its 2001 estimate to $1.50 from $1.40.
Lehman Brothers analyst James Crandell upgraded his ratings Tuesday and increased his earnings estimates for seven oil sector stocks, including Global Marine, which he raised to "buy" from "outperform."
Bear Stearns cut its rating on machinery maker Ingersoll-Rand (IR: Research, Estimates) to "neutral" from "attractive," and cut its 2001 earnings estimate to $3.90 a share from $4.20.
Bear Stearns, citing signs of further weakness in the manufacturing economy, recommended swapping Ingersoll-Rand shares for those of maintenance and repair company W.W. Grainger (GWW: Research, Estimates).
Health and home
Lehman raised its earnings estimates for Aetna (AET: Research, Estimates), a day after the No. 1 U.S. health insurer reported third-quarter earnings that fell because of higher medical costs, but still beat analysts expectations by 20 cents a share.
Lehman raised its 2000 estimate for Aetna to $4.38 a share from $4 and its 2001 estimate to $4.43 from $4.30.
Paine Webber raised its rating on managed-care provider Foundation Health (FHS: Research, Estimates) to "attractive" from "neutral." Foundation Health reported third-quarter earnings Wednesday that beat Wall Street expectations by 2 cents a share.
Salomon Smith Barney upgraded gene therapy maker Genzyme (GENZ: Research, Estimates) to "buy" from "outperform."
Deutsche Banc Alex. Brown upgraded drug maker Pharmacia (PHA: Research, Estimates), which reported third-quarter earnings Monday that met Wall Street expectations, to "buy" from "market perform."
Credit Suisse First Boston raised its rating on homebuilder and mortgage finance company Ryland Group (RYL: Research, Estimates), which Monday reported third-quarter earnings that beat Wall Street estimates by 12 cents a share.
CSFB also upgraded another homebuilder, Beazer Homes USA (BZH: Research, Estimates), which is expected to report earnings after the market close, to "buy" from "hold."
Netopia
WR Hambrecht cut its rating on Netopia (NTPA: Research, Estimates) after the DSL Internet equipment provider Wednesday reported fourth-quarter earnings that missed analysts' estimates by a wide mark and said it expects a breakeven first quarter.
Hambrecht cut its rating on Netopia to "buy" from "strong buy," its 2000 earnings estimate to 19 cents a share from 33 cents and its 2001 estimate to 17 cents from 26 cents.
Nevertheless, Hambrecht said in a research note, "We believe (Netopia) is fundamentally well-positioned from a product and customer standpoint in an industry that retains strong growth potential."
Hambrecht said Netopia's strong customer relationships and broad product line could make it an attractive candidate for acquisition.
Merrill Lynch cut its rating on PSINet (PSIX: Research, Estimates) after the Internet carrier reported a third-quarter loss that beat Wall Street expectations, but warned its fourth-quarter results would miss forecasts and announced a restructuring and executive shake-up.
Merrill said, "We believe (PSINet) faces significant liquidity challenges and appears to have gone into survival mode." Merrill downgraded its intermediate- and long-term ratings to "neutral."
Gap falling
Prudential Securities analyst Stacy Pak cut estimates for earnings per share from clothing retailer Gap (GPS: Research, Estimates).
The company said after markets closed Wednesday that October sales for stores open at least a year fell 2 percent. The company also cut its outlook for fiscal third-quarter profit.
In a report, Pak trimmed the 2000 earnings outlook to $1 a share from $1.11 and the 2001 estimate to $1.35 from $1.50.
"Management refused to give any guidance on the fourth quarter and said that they would not even offer guidance when they report their third-quarter earnings," Pak said.
"We think that they want to wait until after November to get a better feel. We believe that the stock's recent run is overdone due to this lack of visibility."
Gap shares were up $2.19 to $26.63 in morning trading.
Acquisition impacts
Bear Stearns downgraded California bank Imperial Bancorp (IMP: Research, Estimates) to "neutral" from "attractive," saying its stock had nearly reached its $25 price target after the company announced its acquisition by Comerica (CMA: Research, Estimates) Wednesday.
 And Merrill Lynch said it felt shares in magazine publisher Primedia (PRM: Research, Estimates) were being "excessively punished" after it announced Monday it was buying About.com (BOUT: Research, Estimates).
"We do not believe the acquisition should result in value destruction," Merrill said in a research note. Merrill reiterated its "buy" rating on the stock. 
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