Tuesday, June 27, 2006

Calls of Note Part 6

Baird notes their outlook on the industrial cycle is fundamentally unchanged as they continue to believe a mid-cycle slowdown is increasingly likely as we move later in the cycle. Firm is lowering their tgts on Watsco, Inc. (NYSE:WSO) and WESCO International (NYSE:WCC) saying they are increasingly concerned with the potential for disappointing guidance in the face of a slowing economy. While 2Q06 performance should generally be in line to better than expected, they feel the likelihood of positive estimate revisions for 2H06 is equally balanced with the likelihood of negative estimate revisions. The price target for WCC goes to $69 from $80. The price target for WSO goes from $69 to $65. Maintains Neutral for both.

Notablecalls: I would watch both WCC and WSO for weakness over the next few weeks.

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