Analysts waved their magic wands today, pronouncing ratings cuts and upgrades on several big-name technology shares.
The computer giant was upgraded to "neutral" from "underperform" by Smith Barney. SoundView Financial Group followed suit as analyst Mark Specker raised his fiscal 1997 earnings estimate for the company to $6.29 a share from $5.69. He also maintained his short-term and long-term "buy" rating on the stock.
The stock traded as high as 86-5/8 this morning, up 3-1/8 points from yesterday's close of 83-1/2.
Compaq "posted good gross margins for the fourth quarter last year and the outlook for gross margins remains good for this year," said Specker. "There is a shift in their business toward enterprise computing," an emphasis on servers, he said. "Servers have a better gross margin than desktop PCs. They expect to maintain, or grow, gross margins" this year.
Specker explained that gross margins are the cost of raw materials and production over how much the company can make on the finished product.
Compaq's uptick also follows a report released yesterday by IDC Research that said the computer maker held the industry's top spot with strong U.S. and worldwide sales.
IBM (IBM) also came under an analyst's spotlight as Salomon Brothers analyst John Jones raised his rating of IBM to "strong buy" from "buy" following the company's announcement of a stock split. The stock was trading as high as 154-1/4, up more than five percent from yesterday's close of 145-3/4.
Madison Securities Research repeated its "buy" recommendation on IBM stock because of the strength of the company's mainframe, personal computer, server, and service businesses.
Analyst Jeffrey Maxick also cited IBM's reputation as a strong technology partner, and its stock repurchase program.
Reuters contributed to this report.