Increase the focus in Europe on the industrials (page 1 of 3)

US Stocks

Apple Computer Inc (AAPL, $23.45, CSFB recommendation: hold) - Apple's stock has been weak last four weeks, owing to concerns that the company's new iMac product line isn't ramping fast enough. Checks with retailers indicate scant supply of the company's new iMac. Apple typically has problems delivering new products; all three models of the new iMac will not be in stores until Q3.

Besides, stock price is also under pressure due to concern regarding cannibalisation between iMac and G4. We remain with our 12-month target price at $28.00 because currently iMacs account for only 25% of the company's sales, but the higher ASP iMacs should increase the contribution percentage.

Boeing Co (BA, $47.84, CSFB recommendation: buy) - the company said it expected Asia to become the biggest market for commercial planes in the next two decades, with an estimated requirement of more than 5,220 aircraft in deals valued at $537 billion. We remain positive on the company with a 12-month target price at $50.00. We recommend accumulating the stock on weakness at $40.00.

Waste Management Inc. (WMI, $27.03, CSFB recommendation: buy) - WMI intends to accelerate cost cutting plans. With a high free cash flow generated in full year 2001 ($262 million expected by CSFB), the company should commence its plan to repurchase up to $1 billion of its stock this year. 12-month target price $34.00

Aflac Inc. (AFL, $25.75, CSFB recommendation: buy) - The consensus is looking for sales in Japan to meet or likely to exceed expectations, due to a strong acceptance of its new medical sickness product. The positive impact of regulation changes, and new sales techniques at corporate agencies (currently representing for roughly half of Aflac's total sales) should positively impact the bottom line. Besides the US will remain a powerful growth engine for the company. 12-month target price $30.00.

US Technology

The NASDAQ Composite made a big jump last Friday, on the announcement of the Purchasing Managers' Index better-than-expected rise to 53.1% in February from 45.1% in January - indicating an expansion.

This rise then fuelled expectations of an earlier recovery within the technology sector. The positive sentiments also boosted share prices of semiconductor capital equipment companies, which are anticipated to be the first industry group within the technology sector to experience growth from a cyclical up-trend.

Should we turn bullish on the new data? Probably not. We should still bear in mind that capacity utilisation is at very low levels of around 60%, which has surpassed historical low levels in previous downturns. Due to the lack of any new killer applications, we do expect this rate to increase gradually over the next few months. Conclusion: revenue growth for the semiconductor capital equipment segment could still lag far behind expectations.

An interesting point to watch in the coming weeks will be the possible transaction between Hewlett-Packard (HWP US, $20.21, CSFB rating: Hold) and Compaq Computers (CPQ US, $10.44, CSFB rating: Buy). According to the latest Bloomberg News update, Institutional Shareholder Services (ISS), the biggest proxy adviser, is anticipated to issue a recommendation on Hewlett-Packard's $21.9bln acquisition of Compaq Computers tomorrow after market closes (two weeks before shareholders vote on the proposed transaction). The announcement by ISS is deemed significant as their recommendation could alter shareholders' voting decisions.