Cautiously positive on certain US Technology sub sectors (page 1 of 4)

US Stocks

The Gap Inc. (GPS, $13.91, CSFB recommendation: hold) - We think that sales weakness should be turning around as the slowdown stabilises. The biggest risk is that GAP continues to miss the fashion trend. The high short-term debt from the aggressive floor space expansion can be a drag on earnings if the economy fails to recover. On the other hand, it will gain market share if the economy does come back. At $13.50 we think it is an opportunity for a turn around play, 12-months target prices $16.00.

Boeing Co (BA, $49.40, CSFB recommendation: buy) - The company won the role of Lead System Integrator for the Future Combat System program. Boeing & Co is positioned to capture over $4 billion in revenues as the army undertakes its transformation to a more integrated battle force. The initial contract is about $150 million, with $4 billion possible over the next 5 years. We recommend reducing the position, for a 40% gain. Stock remains a core holding, accumulate in the low $40s

Waste Management Inc. (WMI, $27.46, CSFB recommendation: buy) - The company will reduce overall headcount by about 2,000 (3.5% of workforce), expecting to save $100 million in annual expense when completed. The implementation of this plan will probably continue into 2003. During the first quarter, Waste Management Inc. plans to take a charge of $50 million ($0.05 per share) to implement its plan. An additional $25 million in expense will also be recorded throughout the year, putting the plan's total implementation cost at $75 million. The company did not make any changes to its full year earnings expectations. Consensus expects $1.419 a share.12-months target price $34.00

Applied Biosystems Group (ABI, $23.46, CSFB recommendation: hold) - ABI, like many other life science supply companies, has experienced difficult times over the past 12 months due to increased global uncertainty and lower biotech spending. ABI has missed to meet earnings and/or revenues for four quarters running, and the company still does not have good visibility on future sales trend. Nevertheless, we remain positive on Applied Biosystems Group and we continue to think that it is a premium life science supply company. It develops, manufactures, sells, and services instruments and associated consumable reagents for life sciences research. ABI has an installed base of more than 50,000 instruments systems in approximately 100 countries.

In 2001, more than 50% of its revenues came from instruments (DNA sequencers, PCR machines, nucleic acid synthesisers, and mass spectrometers). The other part was derived from reagents, services and software. Furthermore, the company has strong internal R&D capabilities, an extended intellectual property portfolio, and broad access should enable Applied Biosystems Group to maintain its industry-leading position in the near future. Good buy opportunity below $22.00, 12-months target price $28.00.

US Technology

During the last week the NASDAQ Composite made a nice bounce out of its downtrend since the beginning of the year. The rise in the Purchasing Managers' Index to 53.1% in February was probably one of the triggers, short covering an additional cause.

Positive mid-quarter updates coming from major US technology companies provided some relief in investor confidence last week. Intel Corp (INTC, $34.17; CSFB rating: Buy) and Sun Microsystems Inc. (SUNW, $10.00; CSFB rating: Buy), announced that they where both were feeling quite comfortable with their sales forecasts.