For Immediate Release
Chicago, IL –August 26, 2010 – Zacks Equity Research highlights: RC2 Corp (RCRC) as the Bull of the Day and Methanex Corp. (MEOH) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Amazon.com (AMZN), Sony Corp (SNE) and Barnes and Noble (BKS).
Here is a synopsis of all five stocks:
RC2 Corp's (RCRC) second quarter 2010 earnings surpassed the Zacks Consensus Estimate, driven by strong international sales. The company also raised the lower end of its earnings guidance for fiscal 2010.
We expect the company to benefit from its aggressive acquisition strategy, and remain optimistic regarding its recent acquisition of privately-held JJ Cole Collections, a marketer of premium infant products. Additionally, the company's cost reduction initiatives will likely drive the margins. Given the demographic trends, RC2's focus on core early childhood also bodes well.
Considering the company's product line-up in the second half of 2010, we expect an improvement in the top line. Moreover, strong cash flow and modestly levered balance sheet offer a solid operating backdrop. Thus, we are upgrading the stock from Neutral to Outperform.
Methanex Corp. (MEOH) is the world's largest supplier of methanol. Lower methanol pricing and an increase in global inventories are negatively affecting the company. Methanex's Chilean facility is currently operating at 60% due to the lack of natural gas supply.
Although the company reversed year-ago losses in the second quarter of 2010, it missed the Zacks Consensus by $0.04. Methanex has a long history of underperforming the Zacks Consensus Estimate. The company projects a further sales decline and higher costs in the upcoming quarter due to production outages at the Atlas plant.
Methanol prices are expected to be volatile owing to the upcoming additional methanol capacity in the industry in 2010. We are downgrading the stock to Underperform from the previous Neutral recommendation and reduce our target price to $20.00 from $27.00.
Latest Posts on the Zacks Analyst Blog:
Amazon Loses Digital Rights
A feud over e-book rights to some classic works that put literary agent Andrew Wylie and publisher Random House on the warring path appears to have been settled.
Andrew Wylie-led Wylie Agency announced that it has abandoned the decision to award exclusive rights to publish 13 classics in electronic format to Amazon.com (AMZN), a month after the agency infuriated the book industry by awarding the digital rights to the literary works to the company. Random House, which owns the publishing rights to the classics, had questioned Amazon’s “exclusive” agreement with Wylie to sell digital versions of the books. Random House then cut its ties with Wylie.
Although the new arrangement transfers the digital rights to the titles to Random House, and enables the publisher and Mr. Wylie to put the issue on the backburner, it brings to the forefront the contentious issue of royalties for authors that often sees publishers and agents at loggerheads. Publishers typically award 25% of total receipts from the sale of digital books to authors, but agents and authors say they are eligible for 50%, given the low production cost of electronic versions.
The rights in question would have transferred into Amazon’s shelf some of the classics of the 20th century, including such famous titles as Lolita and Invisible Man. Although Amazon has not yet commented on the development, the loss of digital rights of the books is not likely to have any major impact on the firm.
While independent book sellers have welcomed the decision, for publishers -- and perhaps Amazon was trying to venture into that territory -- the situation is perplexing. Even as they negotiate with authors over royalties, they are concerned about losing relevance in the digital age. Many authors have announced that they are moving away from publishing traditional books.
With digital books beginning to gain prominence, e-reader makers such as Amazon, Sony Corp (SNE) and Barnes and Noble (BKS) expect a spurt in sales of their e-reading devices. These firms have announced price cuts and introduced interactive features to boost sales even as new entrants flock into the market. Amazon says it expects to sell more e-books than paperbacks by the end of 2011.
We have a Zacks #5 Rank (short-term Strong Sell recommendation) on Amazon’s shares.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
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AMAZON.COM INC (AMZN): Free Stock Analysis Report
BARNES & NOBLE (BKS): Free Stock Analysis Report
METHANEX CORP (MEOH): Free Stock Analysis Report
RC2 CORP (RCRC): Free Stock Analysis Report
SONY CORP ADR (SNE): Free Stock Analysis Report
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