Schaeffer's Street Chatter Highlights the Following Stocks: Boeing, Martha Stewart Living Omnimedia, and Starbucks

Business Wire, Oct 8, 2004

CINCINNATI -- Today's "Street Chatter" from Schaeffer's Investment Research focuses on: Boeing (NYSE:BA), Martha Stewart Living Omnimedia (NYSE:MSO), and Starbucks (Nasdaq:SBUX). "Street Chatter" is a report that analyzes three newsworthy stocks that are generating a lot of attention on Internet message boards. "Street Chatter" is published on www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research.

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Street Chatter:

1. This morning's Wall Street Journal reported that Boeing (NYSE:BA) was let down by its pals in Congress. Both the House of Representatives and the Senate formally rejected the air freight company's $23 billion bid to provide the U.S. military with tankers capable of aerial-refueling.

BA is trading lower by almost two percent in early-afternoon activity. Technical weakness is nothing new for BA, which reached a short-term peak in mid-September but has since been underperforming the S&P 500 Index (SPX). The shares are now trading beneath their 10-day and 20-day moving averages, which themselves endured a bearish crossover late last month. A final bastion of potential support for the shares resides in the form of the stock's 20-week moving average, which is perched near the 50.50 mark.

Looking to the future, BA will visit the earnings confessional before the opening bell on October 27. According to MSN Money, the company has topped analysts' expectations for the past five consecutive quarters. Wall Street is currently targeting quarterly results of 41 cents per share, or 28 percent above year-ago results.

The sentiment picture on BA is rather mixed at the present juncture. Wall Street is cautious toward the shares, with only three "buy" ratings to the equity's credit compared to eight "holds" and three outright "sells." Options players, on the other hand, have slowly dropped the stock's Schaeffer's put/call open interest ratio (SOIR) to 0.94, which is lower than 62 percent of the past year's worth of readings.

On the short-interest front, the number of BA shares sold short rose 26 percent last month to 11.5 million. Given the security's hefty average daily volume, however, all of these bearish positions could be eradicated in under four days of trading. While this number is nothing to sneeze at, it is not the foundation for a significant short-covering rally.

Click the following link to see the Daily Chart of BA Since July 2004 With 10-Day and 20-Day Moving Averages: http://www.schaeffersresearch.com/wire?ID=11381.

2. Early reports this morning indicated that Martha Stewart has checked into a minimum security women's prison in West Virginia, where she will stay for five months. While the figurehead of Martha Stewart Living Omnimedia (NYSE:MSO) is learning how to turn this stint in the clink into a "good thing," MSO shares are moving along unfettered. The stock is consolidating in the neighborhood of its annual highs and is advancing toward its 10-day moving average.

Wall Street turned against MSO in the past and has refused the give the company a fair shake of late, as evidenced by the latest Zacks (www.Zacks.com) data. Currently, only three analysts follow the security, all of whom rate MSO as a "sell." Any additional broker coverage or upgrades from this bearish trio could send the stock higher.

As far as individual investors are concerned, the sentiment picture is rather bearish as well. There remain 5.3 million shorted MSO shares despite a 14-percent decline in short interest last month. This amounts to 41 percent of the equity's total float available for trading and could not be covered in less than 31 trading days (at the equity's current average daily volume). Moreover, the equity's SOIR of 0.88 is among the top one-quarter of the past year's worth of SOIR data.

Click the following link to see the Daily Chart of MSO Since August 2004 With 10-Day Moving Average: http://www.schaeffersresearch.com/wire?ID=11381.

3. Yesterday, the little Seattle coffee company that found itself on every corner in America endured a rare down day, after issuing same-store sales numbers that failed to impress. In September, Starbucks (Nasdaq:SBUX) posted a seven-percent same-store sales gain, its lowest increase since May 2003. Reacting to this news, Harris Nesbitt lowered its 12-month price target on SBUX by $2 to $50. Today, however, SBUX found a friend in UBS, which boosted its rating on the stock to a "buy" from a "neutral," citing positive margin drivers for the company. The brokerage firm also shuffled its fiscal year 2005 earnings per share target for SBUX higher to $1.19 from $1.15, while also raising its price target by seven dollars to 56.

SBUX has rallied to a new annual peak today and is currently enjoying a solid gain despite weakness throughout the broader market. In addition to fine Italian espresso and tasty biscotti, outperformance has been the SBUX recipe of late. The shares have been in uptrending mode for more than a year and have not closed beneath their 10-week and 20-week moving averages for over 15 months.