Goldman Cuts Estimates, Targets for Slew of Tech Stocks

Wary comments by Goldman Sachs Friday morning on the outlook for enterprise technology spending are apparently weighing on tech shares.

Goldman analysts Jim Covello, Sarah Friar and Derek Bingham wrote that they have become “incrementally more cautious on tech fundamentals given the current macroeconomic backdrop,” which suggests soft capital spending in 2008, in particular for the U.S. “We believe CIOs may delay their purchases in the early part of 2008,”they wrote.

The Goldman analysts write that “this is not a call to sell all tech stocks,” and that “while there is likely little upside for some areas of tech,” in particular software, on which the firm turned cautious earlier this week, other areas have underperformed this year, including hardware and semis, and “already likely reflect the pending fundamental weakness.”

That said, Goldman reduced estimates and cut price price targets for many names, “with particular focus on companies with large enterprise exposure and significant dependence on the U.S. consumer.”

The list of companies affected by today’s Goldman call is long:

In the communications sector, they cut estimates and/or price targets for:

• Netgear (NTGR)
• Corning (GLW)
• Cisco (CSCO)
• Nortel (NT)
• Aruba (ARUN)
• Juniper (JNPR)

In the hardware sector, Goldman cut estimates and/or price targets for:

• Dell (DELL)
• Directed Electronics (DEIX)
• EMC (EMC)
• Emulex (ELX)
• IBM (IBM)
• Intevac (IVAC)
• Isilon (ISLN)
• Lexmark (LXK)
• Network Appliance (NTAP)
• Sun Microsystems (JAVAD)
• Brocade (BRCD)

Payment processing companies affected by estimate and/or price target changes include:

• ADP (ADP)
• Paychex (PAYX)
• Global Cash Access (GCA)
• Global Payments (GPN)
• Master Card (MA)
• MoneyGram (MGI)
• Amdocs (DOX)
• Convergys (CVG)
• CSG Systems (CSGS)
• Synchronoss (SNCR)

IT services companies affected include:

• Accenture (ACN)
• Bearing Point (BE)
• Sapient (SAPE)
• Affiliated Computer Services (ACS)
• Computer Sciences (CSC)
• EDS (EDS)
• Unisys (UIS)
• Cognizant (CTSH)
• ExlService (EXLS)
• Infosys (INFY)
• Patini
• Satyam (SAY)
• Witpro (WIT)

Chip stocks affected by estimate cuts and/or price target changes include:

• Advanced Micro Devices (AMD)
• ATMI (ATMI)
• Broadcom (BRCM)
• Entegris (ENTG)
• FormFactor (FORM)
• International Rectifier (IRF)
• Intel (INTC)
• Intersil (ISIL)
• Microchip (MCHP)
• Micrel (MCRL)
• Marvell (MRVL)
• Micron (MU)
• Maxim (MXIM)
• National Semi (NSM)
• Nvidia (NVDA)
• Teradyne (TER)
• Texas Instruments (TXN)
• Volterra (VLTR)

Goldman earlier this week made similar moves on software and analog semis.

Friday’s Goldman calls helps explain the relative underperformance of tech stocks today; while the Dow gained almost 60 points or 0.45%; the Nasdaq Composite is off 7 points, or 0.3%.

Comments

[jcrash]

Is there somewhere we can see these "cut" estimates? Downgrading someone like NVDA is just silly. The company is selling at a ridiculously cheap P/E and they are not indicating any slowdowns.

[will]

Goldman sucks. Whatever they say, do the opposite. They are crooks. That being said, they say tech stocks are weak. I say buy all you can. Don't let them BS you and steal your shares. Tech is the best play right now through March!!!!