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| S&P 500 Index: PepsiCo Inc and Corning Inc in broker upgrades |
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| Written by Will Peters | |
| Monday, 08 February 2010 12:21 | |
Looking ahead to the PepsiCo report to the markets.______________The S&P 500 Index (INDEXSP:.INX) closed higher by 0.29% at 1,066.19 points on what turned out to be a good close to a poor week. This morning sees S&P 500 futures 0.007% lower. With Nasdaq Composite futures lower by 0.14% and and Dow Jones Industrial Futures lower by 0.006% it is too early to make a call on where the US markets will open today. Two S&P 500 Index players have received broker upgrades over the course of the weekend. Corning Incorporated (NYSE:GLW) was upgraded by Barclays Capital with a price target up to 23. Corning Inc closed 1.10% lower at 18.05 on Friday. Analysts have made much of Corning Inc's exposure to the Chinese market: "We expect the local (Chinese) industry to be built," James Flaws, Corning's vice-chairman and chief financial officer said. "We think eventually a series of large size fabs (factories) will be built and we had a finishing factory there for two years and we plan on taking melting there. We haven't made a final decision, but we expect to be a big supplier to the Chinese panel industry going forward." However two issues to note: Significant capital spending on glass-melting capacity in China probably won't take place until 2011 and Corning Inc.'s increasing dependence on the Chinese market is complicated by the US government's decision to sell a $6.4 billion package of weapons to Taiwan, which China claims as its own territory. PepsiCoPepsiCo Incorporated (NYSE:PEP) was upgraded by JPMorgan with a price target up to 74. PepsiCo Inc closed 0.22% lower at 59.51 on Friday. PepsiCo is one of the largest corporates to report back to the market this week. The stock has a Return on Equity (trailing 12-months) of 33.12 (What is ROE?) and an EPS ratio (trailing 12 months) of 3.32 (Understanding the EPS ratio). The company has posted a - .73% gain (loss) in stock price since about the time of its last earnings release, while the Processed & Packaged Goods industry overall has returned .15% in the same period. PEP will file Thursday. According to the Financial Times: "Investors will look closely at earnings driven by increased or decreased volumes in sales of soft drinks in North America, versus revenues generated by favourable swings in foreign exchange. Both companies are betting on growth in emerging markets to fuel future earnings. "As for currency fluctuations, earnings at Coke and Pepsi were hit in the first three quarters of 2009 by a declining dollar, a situation that reversed during the final three months. The dollar's recent gains are expected to add to the two companies' earnings this year. "In Pepsi's case, much of the attention will be on the consolidation of the company's bottling operations into PepsiCo over the next few weeks. Pepsi earnings will also allow investors to monitor the performance of Quaker Oats and Gatorade, which have lagged behind rivals. The benefits of Pepsi's bottler consolidation, together with associated cost savings and synergies, will be analysed closely." 
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| Last Updated ( Monday, 08 February 2010 12:25 ) |
