At The Motley Fool, we poke plenty of fun at Wall Street
analysts and their endless cycle of upgrades, downgrades, and
"initiating coverage at neutral." So you might think we'd be
the last people to give virtual ink to such "news." And we
would be -- if that were all we were doing.
But in "This Just In," we don't simply tell you what the
analysts said. We'll also show you whether they know what
they're talking about. To help, we've enlisted
Motley Fool CAPS, our tool for rating stocks and analysts
alike. With CAPS, we track the long-term performance of Wall
Street's best and brightest -- and its worst and sorriest,
too.
And speaking of the worst...
Earnings season is a scary time. (
Especially around Halloween.) If you own a bad stock, and
it reports worse news, your investment could blow up in an
instant. Conversely, if you're short a great stock, as
Collins Stewarthas been the past few months, and it
performs excellently, not only are you due for some losses,
but the sky's the limit on how bad things can get.
With just a day remaining before
Dolby Labs (NYSE: DLB) reports Q3 earnings,
Collins lost its nerve Friday, removing its sell rating on
the stock and "upgrading DLB to HOLD ahead of the company's
FQ4 (Sep) report."
Collins still believes Dolby is in for a rough fiscal
2010, as the firm struggles to "replace $40-$50M in one-time
revenues" booked in 2009, and overcome "declining attach
rates of third-party DVD playback software beginning with the
launch of Windows 7."
Collins figures these factors will weigh on Dolby's
earnings in 2010. However, recent "strong shipment trends in
DVD, Notebook
PCs, and LCD TVs" have the analyst
worrying that Dolby might earn $0.35 per share in Q4 2009
($0.02 more than predicted) and guide even higher in the near
term. With the prospect of an "earnings beat" imminent,
Collins quickly pulled its sell rating. But is that reason
for the rest of us to become optimistic about the stock?
Let's go to the tape
Not necessarily. First, consider Collins'
less-than-spectacular record in the field of
Electronic Equipment, Instruments and Componentsstocks.
Collins' previous sell rating on Dolby was deeply in the red
before being withdrawn -- and it's not the only one:
Company
Collins Stewart Says:
CAPS says:
Collins Stewart's Picks Beating (Lagging)
S&P By:
AU Optronics  (NYSE:
AUO)
Outperform
*****
(40 points)
Flextronics Int'l
Underperform
****
(102 points) (two picks)
Nam Tai Electronics (NYSE:
NTE)
Underperform
*****
42 points
In fact, only 15% of the 13 recommendations Collins has
made in this sector have beat the market over the past three
years. But perhaps Collins has had better luck with the PC
equipment makers? After all, their strong sales performance
has Collins fearing for the safety of its sell rating on
Dolby...
Company
Collins Stewart Says:
CAPS says:
Collins Stewart's Picks Beating (Lagging)
S&P By:
Apple (Nasdaq: AAPL) Continued... |