The recent strength in technology stocks may have lifted investor spirits, but it's done little to boost the value of a handful of stocks picked by leading sell-side analysts as their best short-term investments earlier this year.
Back in early February, Inter@ctive Investor asked analysts from a variety of sectors to give their best short-term picks--for the next three to six months--and also some of the names they're not terribly excited about in the short run.
At this early juncture, it appears these analysts did a fine job of identifying the dogs but--at least so far--their top picks aren't exactly setting Wall Street on fire.
In their defense, technology stocks as a whole have languished in the past two months. Despite it's strong gains the past two weeks, the Nasdaq composite is down 13 percent from the first week in February when these analysts unveiled their picks.
They still have a little over three months to rebound but to this point, here's the update:
Glen Ingalls, Wit SoundView
Ingalls identified Brocade Communications (Nasdaq: BRCD) as his best pick back in February when the stock was trading at $74.13, well off its 52-week high of $133.69 set in October.
This week, Brocade shares are trading at $35.
"The SAN market still has a long way to grow," Ingalls said at the time. "Brocade's the best-positioned company in this group and is growing at an astronomical rate. It holds a dominant share position and is actually setting prices in this market."
While Brocade did report strong first-quarter earnings of 13 cents a share on sales of $165 million in late February, the stock's been hammered in the past couple months after it cut its outlook for 2001.
Ingalls also picked Network Appliance (Nasdaq: NTAP), another storage stock stung by the slumping U.S. economy. At the time, it was trading at $38 a share.
On Friday, the stock was limping along at $23 a share.
He didn't like McData (Nasdaq: MCDT) or Computer Network Technology (Nasdaq: CMNT), two stocks that were trading at $35 and $14 a share, respectively, in early February.
McData is now trading at $28 a share and Computer Network Technology is perched at $13.
John Corcoran, CIBC World Markets
Corcoran loved Nuance Communications (Nasdaq: NUAN) and SpeechWorks (Nasdaq: SPWX), two companies leading the charge for speech-activated services for wireless networks.
"These are highly volatile stocks and have been more so lately because they're kind of lumped in with the Internet stocks," he said in February. "But eventually a staggering amount of traffic will either originate or terminate on a wireless platform, making these companies all the more attractive."
Nuance shares were trading at $37.75 at the time, down from a high of $182 set in August. SpeechWorks was trading at $28.
On Friday, both stocks were buried below $14 a share.
Kathleen Heaney, BlueStone Capital
Heaney was the odd bird of the batch, jumping to the defense of beaten down Internet stocks at a time when no one wanted to admit ever owning or believing in any of these stocks.
Back in February, she pegged Alloy Online (Nasdaq: ALOY), the Web site catering to the so-called Generation Y demographic, Hotjobs.com (Nasdaq: HOTJ), the online employment service site, and Yahoo (Nasdaq: YHOO) as her top picks.
"Yahoo is a survivor," Heaney said at the time. "I believe the advertising model can work just as it did for television, radio and print. It's already doing $1 billion in sales, and at its current price, I like it a lot."
In the interim, Yahoo has replaced CEO Tim Koogle with Warner Brothers executive Terry Semel, cut its staff by 12 percent and lowered sales and earnings estimates for the fiscal year.
Meanwhile, the stock has tumbled from $28 a share in early February to below $20 this week.
Alloy Online topped analysts' estimates in its latest quarter, earning $779,000, or 4 cents a share, on sales of $42.5 million. Yet the stock has slipped from $12.38 to around $9 a share this week.
Heaney said the prospects weren't especially bright for NBC Internet (Nasdaq: NBCI) at $2.81 and Ashford.com (Nasdaq: ASFD) at 69 cents. Those stock are now trading at $2.12 and 56 cents a share, respectively. CNET Networks, publisher of Inter@ctive Investor, has a stake in NBCi.
Jay Vleeschhouwer, Merrill Lynch
Vleeschhouwer named Cadence Design Systems (NYSE: CDN) and Synopsys (Nasdaq: SNPS) as his top picks along with Adobe Systems (Nasdaq: ADBE).
"They're two market leaders in the electronic design software and services market," he said in February. "We've been increasingly high on this market since the latter part of 2000. Customers are accelerating their bookings because they need to upgrade their chip design technologies and methodologies."
Synopsys is now trading at $51.80, up slightly from $49.50. Cadence shares slipped from $26.61 to $20.49 this week.
We'll check back on these stocks in August and see if the analysts still like their picks.