Use the current weakness to build up positions in Adecco, Allianz, Arcelor, Aventis, BNP and SAP. (page 1 of 2)

US Stocks

General Electric Co. (GE, $31.14, CSFB recommendation: Buy) reported April orders declined more than 20%, in line with expectations. The combination of fewer gas turbines orders and lower commercial aircraft engine orders combined to offset improving trends in company's short-cycle business and services growth. We remain positive on the company and believe that at current levels this is an opportunity to invest in a core holding for the long-term.

Pfizer Inc. (PFE, $34.60, CSFB recommendation: Buy): an American Psychiatric Association meeting provided solid evidence on Pfizer's on-going central nervous system franchise strength, particularly with the emergence of Pregabalin as a potentially new therapy for use in generalised anxiety disorder. Pregabalin's NDA should be filed this year, positioning as a significant new product for use in epilepsy, neuropathic pain as well as anxiety. CSFB expects $2 million in sales potential. Pfizer Inc. remains one of our favourites in pharma sector. Company's researches should end in high profitable products. 12-month target price at $54.00.

Boeing Co. (BA, $42.65, CSFB recommendation: Buy): Its commercial aircraft manufacturing operations will remain profitable through this down cycle and operating margin will be maintained around 6-8%. The company was quite aggressive in cutting production post September 11th. This move and the subsequent headcount reduction have proven to be the right strategic decision. The trauma faced by the national airline carriers has resulted in sizeable losses and a lack of new plane orders. Meanwhile, military aircraft and missiles systems continue to perform well despite the near total collapse in demand for communication satellite launches. Boeing Co. is in competition with Lockheed Martin Corp. (LMT) to develop and manufacture the future VLT aircraft, which promises to be the largest military contract than ever. The company has a good, diverse business, encompassing tactical and strategic aircraft and weapons and rotorcraft.


US Technology Stocks

Currently we see some nervousness among technology investors, as the tech companies are giving their 2Q guidance. During this week we will see preliminary data coming from Hewlett-Packard (HPQ US, $19.09; CSFB rating: Hold) on Tuesday, EMC Corp. (EMC US, $7.25; CSFB rating: Strong Buy), Intel Corp. (INTC US, $27.62; CSFB rating: Buy) and Intersil Corp. (ISIL US, $24.02; CSFB rating: Buy) on Thursday. The updates could lead to some volatility in the market as investors are ready to pull their money out of the sector, punishing any disappointment with a sell-off. Any good news could also lead to short bounces. We do not expect much from the mid quarter updates and expect most companies to be cautious in forecasting their numbers to avoid any shortfall at this point of the cycle.

We are seeing some indications of improvements in the fundamentals for the technology sector and believe we should have reached the trough of the cycle. The fixed line networking equipment sector has seen orders rising 10.9% sequentially, following the decline of 11.3% in March, and shipments rose 2.6% month over month to $5.8 bln, with book-to-bill ratio remaining stable, which means that orders are also improving. The same can be said for the semiconductor capital equipment companies, which as a group saw their book-to-bill ratio rise to 1.2 in April, (numbers above 1 indicating that orders outstrip shipments). This is the case for the second consecutive month, as the ratio was at 1.05 in March.