Goldman Sachs has issued a broader snapshot of what to expect from Q4 earnings now that we have seen some of the companies report. This is also ahead of the earning deluge next week. The bulge bracket firm believes that results will be mostly in-line with expectation from year end seasonality and a weak US Dollar. But Goldman Sachs is maintaining its defensive stance for enterprise-facing hardware stocks in early 2008 as CIO’s underspend on budgets in early 2008.
This actually outlines some of its favorite tech names that have double-digit earnings growth and P/E ratios under the S&P 500. Here are some of the picks below:
- Hewlett-Packard (NYSE:HPQ) remains its number one pick.
- IBM (NYSE:IBM), Seagate Tech (NYSE: STX), and Ingram Micro (NYSE: IM) are also listed.
- Apple (NASDAQ: AAPL) is noted as one that investors should continue to own for its upcoming catalysts.
- EMC Corp. (NYSE: EMC) is noted as another standout stock.
- Dell Inc. (NASDAQ: DELL) is also noted positively here as one to own because of its long-term turnaround potential.
While it is positive on these names above, Goldman Sachs is negative on two companies that it doesn’t believe benefited from any spending. The two negative stocks noted are:
- Lexmark (NYSE: LXK) was noted as likely to post weak numbers, and it is less than $1.00 above the 52-week lows;
- Intevac Inc. (NASDAQ: IVAC), which is trading only about 1% above its 52-week low.
This also follows its raise yesterday where Microsoft (NASDAQ:MSFT) was raised to the Americas Conviction Buy List.
Jon C. Ogg
January 18, 2008