For Immediate Release
Chicago, IL – May 18, 2010 – Zacks Equity Research highlights Microsoft (MSFT) as the Bull of the Day and American Oriental Bioengineering (AOB) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Frontier Communications (FTR), Verizon (VZ) and ArvinMeritor Inc. (ARM).
Full analysis of all these stocks is available at http://at.zacks.com/?id=5506.
Here is a synopsis of all five stocks:
Microsoft's (MSFT) huge core business, its acquisition strategy and cost reduction initiatives are driving strong cash flows and earnings growth. That said, shares are currently trading at 15.0X the trailing twelve months earnings compared to 35.5X for the peer group and 29.6X for the S&P 500.
While we recognize that competition continues to increase and the company's dominant position in the PC market could erode, we note that attach rates of the new operating system are increasing. We believe that Microsoft is poised to benefit from new product cycles in both the enterprise PC and server markets.
Over the past five years, MSFT shares have traded in the range of 8.6X to 24.9X trailing twelve months earnings. Therefore, it is currently trading below the middle of the historical range. shares had a great run in 2009, but the shares are down 5.1% since the beginning of the year. However, we expect the shares to trade higher since we are very optimistic about the new products and expect the company to benefit from new product cycles.
American Oriental Bioengineering's (AOB) first quarter earnings per share came in at $0.04, well below both the Zacks Consensus Estimate of $0.07 and $0.10 reported in the year-ago period. Although revenues recorded a 16.7% year-over-year increase to $53.7 million, we remain concerned about the declining operating margin.
Prescription drug sales should continue their growth trajectory as China aims to reform its health care sector to incorporate unaddressed rural markets. However, in the highly fragmented Chinese pharmaceutical industry, AOB's expenses are likely to increase given the need to stay ahead of its competitors and to meet stringent manufacturing norms.
We maintain our Underperform recommendation on the stock with a price target of $3. Our target price is based on 6.5X our 2010 EPS estimate of $0.46.
Latest Posts on the Zacks Analyst Blog:
Frontier Gets Last PSC Approval
Frontier Communications' (FTR) pending acquisition of Verizon (VZ) local wireline operations was at last approved by the Public Service Commission (PSC) of West Virginia. With this, the company has received all the required state approvals for the transaction.
The deal has now passed a major obstacle -- it was opposed by the Communications Workers of America (CWA) in West Virginia. The CWA feared that the transaction is detrimental to the state’s interest and may lead Frontier to a severe financial crunch.
West Virginia is the ninth and final state to approve the deal, after the required approvals from Arizona, California, Illinois, Nevada, Ohio, Oregon, South Carolina and Washington. The pending acquisition is at present in the sole hands of the Federal Communications Commission (FCC), as it has already received various anti-trust approvals from Washington. The transaction is expected to close by the end of the second quarter of 2010.
As per the agreement, Verizon will receive $5.3 billion in Frontier common stock, plus $3.3 billion in a combination of cash, debt and assumption of previous debt issued by Verizon subsidiaries. Verizon holders will own 68% of Frontier after the transaction.
ArvinMeritor: Earnings Scorecard
ArvinMeritor Inc. (ARM) reported its results for second quarter of its fiscal 2010 ended March 31, 2010 on May 4, beating the Zacks Consensus Estimate by a significant margin of 16 cents per share. However, the market failed to react very positively, with share prices fluctuating in the subsequent days, mostly in a downward direction.
Analysts declined to be encouraged by the results as well, given the company’s weak outlook. Below we will cover the results of the recent earnings announcement, subsequent analyst estimate revisions and Zacks ratings for both short-term and the long-term outlooks for the stock.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About the Analyst Blog
Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today by visiting http://at.zacks.com/?id=7159.
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5509.
Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Contact:
Mark Vickery
Web Content Editor
312-265-9380
Visit: www.zacks.com
Zacks Investment Research
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
