For Immediate Release
Chicago, IL - April 2, 2012 - Zacks.com announces the list of
stocks featured in the Analyst Blog. Every day the Zacks Equity
Research analysts discuss the latest news and events impacting
stocks and the financial markets. Stocks recently featured in the
blog include
Cisco Systems Inc.
(
CSCO
),
Juniper Networks
(
JNPR
),
Hewlett Packard Company
(
HPQ
),
F5 Networks
(
FFIV
) and
U.S. Bancorp
(
USB
).
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Here are highlights from Friday's Analyst Blog:
Cisco Eyes Network Manager
Cisco Systems Inc.
(
CSCO
) announced its plan to buy privately held ClearAccess for an
undisclosed amount. The transaction is expected to be completed by
the fourth quarter of fiscal 2012, pending customary closing
conditions.
Vancouver-based ClearAccess provides both hardware and software
for Internet service providers to manage increasingly complex
networks for homes and mobile devices.
The newly acquired products from the ClearAccess acquisition
include TR-069-based software that helps service providers to
manage residential and mobile devices. Cisco intends to blend
TR-069-based product with Cisco Prime, its network management
software portfolio. The acquisition will improve Cisco's software
capabilities for service providers, thereby improving operational
efficiencies and customer experiences.
However, the hardware portion of the ClearAccess, called Smart
RG Gateways, will remain an independent company called SmartRG
Inc.
Cisco is eyeing to capture a large share in the expected revenue
to be generated by worldwide internet traffic within the next few
years. The network giant assessed that contribution from video
content transfer would be roughly 90.0% of the total internet
traffic revenue. ClearAccess' cloud and video services will allow
Cisco to capitalize the opportunity. Earlier this month, Cisco also
acquired London-based video communications company NDS for $4
billion to bolster its video strategy.
Cisco Systems is a leading provider of IP-based networking and
other products. Although Cisco is taking steps to lower its cost
structure by reducing headcount, it is not ignoring growth
opportunities.
Cisco is no doubt the networking leader, but competitors like
Juniper Networks
(
JNPR
),
Hewlett Packard Company
(
HPQ
) and
F5 Networks
(
FFIV
) are gradually picking up market share.
The Zacks Rank on Cisco shares is #2, implying a Buy
recommendation over the next 1-3 months.
U.S.
Bancorp Lowered to Neutral
We are downgrading our recommendation on
U.S. Bancorp
(
USB
) to Neutral from Outperform based on a tepid economic recovery and
low interest rate environment. We anticipate a compression in
interest margin and expect only modest fee income growth in the
upcoming quarters.
Fourth Quarter Results
U.S. Bancorp reported fourth-quarter 2011 earnings of 69 cents
per share. Excluding the gain from a litigation settlement and
expense accrual related to mortgage servicing matters, the company
reported earnings of 64 cents per share. Earnings surpassed the
Zacks Consensus Estimate of 63 cents per share.
Stress Test and Capital Redeployment
U.S. Bancorp has a disciplined approach to capital management,
and capital redeployment remains a top priority for the company. We
believe that the passing of the stress test along with the capital
redeployment plans serve as positive catalysts for the company's
stock price.
After receiving the approval from the Federal Reserve, the
company has announced a 56% hike in its dividend and a 100 million
share repurchase authorization. In fact, management expects to
return 60-80% of earnings to its shareholders in the form of
dividends and buybacks over the long term. Such
shareholder-friendly approach inspires investors' confidence in the
stock.
Our Take
With a wide range of product offerings, U.S. Bancorp remains
well positioned for organic growth. Its strong retail banking
franchise and leadership in payment processing should continue to
help in growing its earnings. Moreover, the company is also focused
on expanding its business through acquisitions. It has a
well-balanced business model, with non-interest revenue
representing nearly half of its total revenue.
U.S. Bancorp's loan growth, improving credit quality and solid
capital levels appear impressive. A rise in dividend payouts and
share buybacks following the stress test results give a fillip to
investors' confidence.
However, we believe that the positive factors have already been
priced in the current valuation. Moreover, a sluggish economy that
adversely affected consumer and business spending has impacted a
number of fee-based categories over the last several quarters.
Though we expect the fee-based category to pick up over time with
an improvement in the economy, we think that the progress will be
tardy with a sluggish economy recovering. Moreover, we believe that
given the current interest rate environment and the company's cash
position, net interest margin will remain under pressure.
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CISCO SYSTEMS (
CSCO
): Free Stock Analysis Report
F5 NETWORKS INC (
FFIV
): Free Stock Analysis Report
HEWLETT PACKARD (
HPQ
): Free Stock Analysis Report
JUNIPER NETWRKS (
JNPR
): Free Stock Analysis Report
US BANCORP (
USB
): Free Stock Analysis Report
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