Zacks Bull and Bear of the Day Highlights: Hanger Orthopedic, AMB Property, MasterCard, Visa and Pfizer - Press Releases

For Immediate Release

Chicago, IL –August 04, 2010 – Zacks Equity Research highlights: Hanger Orthopedic (HGR) as the Bull of the Day and AMB Property (AMB) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on MasterCard Inc. (MA), Visa Inc. (V) and Pfizer Inc. (PFE).

Here is a synopsis of all five stocks:

Bull of the Day:

We reiterate our Outperform recommendation on Hanger Orthopedic (HGR). Earnings for the last quarter beat the Zacks Consensus Estimate by a penny. Top-line growth was fueled by healthy contributions from patient-care and distribution businesses and acquisitions.

Hanger is the market leader in the orthotic and prosthetic (O&P) patient care services market, operating through 678 patient care centers across the U.S. The company's economies of scale are unmatched by its competitors. Hanger continues to pursue acquisitions to expand its geographic presence and revenues.

While costs associated with relocation are expected to dilute earnings in the third quarter, the company is poised to achieve meaningful cost synergies from such initiatives in future reporting periods.

Bear of the Day:

We are changing our long-term recommendation for AMB Property (AMB) to Underperform from Neutral as we anticipate the stock to perform well below the broader market. Fiscal 2010 earnings estimates were reduced by 11 out of 13 analysts covering the stock, while none increased them over the last 30 days.

With a decline in commercial real estate fundamentals, demand for AMB's services has decreased comparatively. However, AMB's second quarter 2010 results were in line with the Zacks Consensus estimate.

Our long-term Underperform recommendation on the stock indicates that AMB would perform well below the broader market. Our target price of $24.00 at 19.5X 2010 FFO/Share factors in this view. Over the last five years, AMB s shares have traded in a range of 4.1X to 21.2X trailing 12-month FFO

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MasterCard Beats, Margins Up

MasterCard Inc.'s (MA) second quarter operating earnings per share of $3.49 came in substantially ahead of the Zacks Consensus Estimate of $3.33 and $2.67 in the year-ago quarter. Net income for the reported quarter was $458 million, up 31.2% from $349 million in the prior-year quarter.

Results for the reported quarter improved over the prior-year quarter primarily due to better pricing, an increased number of processed transactions and reduced operating expenses that drove operating margins higher. However, higher income tax expenses and flattish growth in the number of processed transactions were on the downside for MasterCard.

Total revenue increased 6.7% year over year to $1.37 billion, primarily due to a 4% favorable pricing changes, a 0.1% growth in the number of processed transactions to 5.6 billion and a 15.2% increase in cross-border volumes. GDV increased 8.5% to $656 billion during the reported quarter. As of June 30, 2010, MasterCard issued 1.6 billion MasterCard and Maestro-branded cards.

Total operating expenses decreased 9.7% year over year to $648 million. Currency fluctuation contributed 0.7 percentage point of the increase to the expenses. The overall increase was primarily attributable to a 13.8% decrease in general and administrative expenses and a 3.8% drop in depreciation and amortization expenses. The operating margin for the reported quarter came in at 52.6%, up from 43.5% in the year-ago quarter.

MasterCard's effective tax rate for the reported quarter was 35.7%, up from 35.0% in the year-ago period. The increase was primarily attributable to some discrete adjustments recorded in the quarter.

As of June 30, 2010, MasterCard’s net operating cash flow was $438 million, down from $778 million as of June 30, 2009. At the end of June 30, 2010, cash and cash equivalents totalled to $2.32 billion; long-term debt totalled to $19 million while total equity was recorded at $4.13 billion.

Dividend Update

On June 7, 2010, the board of MasterCard declared a quarterly cash dividend of 15 cents per share, to the shareholders of its Class A common stock and Class B common stock. The cash dividend will be paid on August 10, 2010 to the holders of record in both categories as on July 6, 2010.

Our Take

MasterCard’s results have outshone its prime competitor, Visa Inc. (V) that reported its fiscal third quarter earnings of 97 cents on July 28, 2010. This came in ahead of the Zacks Consensus Estimate of 93 cents, but was in line with the prior-year quarter.

MasterCard benefits from strong secular demand growth, meaningful international exposure, high barriers, excellent pricing power, risk-free balance sheet and impressive operating leverage. Also, the above-average earnings growth, strong competitive position and leverage to an eventual economic recovery will result in a relative valuation premium.

However, we are concerned about MasterCard’s resilience and ability to raise prices, the detrimental effects of the ongoing financial overhaul reform and scope for increasing cash flow. Hence, the cautious outlook over the near term justifies our Neutral recommendation.

Strong Quarter for Pfizer

Pfizer Inc. (PFE) reported second quarter earnings of 62 cents per share, well above the Zacks Consensus Estimate of 52 cents, and 29.2% above the year-ago earnings of 48 cents. Performance was boosted by the Wyeth acquisition, which was partially offset by increased expenses.

Revenues were up 58%, mainly due to the Wyeth acquisition, which added $5.4 billion or 50% to the total. While foreign exchange boosted revenues by $584 million, or 5%, legacy Pfizer products positively impacted revenues by $315 million or 3%. Second quarter revenues came in at $17.3 billion, comfortably above the Zacks Consensus Estimate of $16.6 billion.

International revenues increased 54% to $9.9 billion, reflecting 45% operational growth and a 9% favorable foreign exchange impact. Meanwhile, US revenues increased 63% to $7.4 billion.

Following the Wyeth acquisition, Pfizer operates through two segments: Biopharmaceutical and Diversified. The Biopharmaceutical segment posted second quarter revenues of $15 billion, up 49%. Wyeth products contributed $4.5 billion to segment revenues with performance being boosted by drugs like Premarin, Enbrel, Prevnar, and Effexor. Foreign exchange boosted Biopharmaceutical segment revenues by 5% ($485 million).

Meanwhile, several Pfizer legacy products like Camptosar and Norvasc continued to struggle during the quarter, mainly due to the presence of generic competition.

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.

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