Do fundie guys make market calls?

If you’ve been paying attention, you may have noticed a lot of the fundamental analysts’ recent upgrades. I get a very real sense that these raises were much more of a market call than legitimate upgrades based upon real fundamental improvements in these companies businesses.

Consider these: Goldman Sachs upgraded Cisco and Software; Cisco Systems was upped to buy from hold at Deutsche Bank; Intl Business Machines(IBM:NYSE) was upped to outperform from neutral at Credit Suisse First Boston; Both Soundview and Smith Barney ups the Chip Equipment stocks;

Are these fundamental analysts making a market timing call? Were their targets too low, and they feared the train was leaving the station without them?

I wonder if this is a classic overeaction . . . Are the fundie guys doing their research and channel checks, and boldly determining that a tech revival is upon us? Or are they playing the market timing game ? (note — unrelated to mutual funds market timing)

I’m not sure, but I thought I should at least raise the issue; It would be ironic that these guys suddenly get Bull Fever after a 40% rise in the Nazz . . .

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  1. Kaushik commented on Sep 10

    I am not an analyst (at least not a financial one). But I tend
    to think that you are right about your suspicions.

    I think WSJ’s ‘Ahead of the tape’ from a few weeks back was much
    more on the mark when it questioned people’s classifying
    Cisco as an emerging technology company. It felt that Cisco is
    becoming cyclical in its behaviour and therefore its stock should not
    be treated as an emerging technology stock.

    Now, I won’t go so far as to say that, but I feel that people
    often tend to put both maturing IT technology and
    emerging IT technology in the same bucket which is wrong. Cisco buys
    emerging technology companies in order to sustain its growth (among
    other things), but considering its size and the rate in which
    it needs to grow such acquisitions have less and less impact.

    What people also tend to forget is that Cisco’s TA is still doing
    mostly maintenance projects (I dont know about the non-US market,
    but no one seems to be growing exponentially in any sector,
    except may be China ) and anything that
    doesn’t have ROI within one year tends to
    get shot down.

    Unfortunately, the stupidity of the market is going to come back and
    bite the tech sector as a whole. acquisitions

    ps: incidentally, your comments box is too spread out on my screen.
    It is not very comfortable typing comments. It could be because I am
    using a lower resolution on my laptop right now ….but you might
    want to look into it (Platform: W2K, IE 6.0)
    look into it

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