For Immediate Release
Chicago, IL - March 19, 2012 - Zacks Equity Research highlights
Apple, Inc.
(
AAPL
) as the Bull of the Day and
XL Group Plc
(
XL
) as the Bear of the Day. In addition, Zacks Equity Research
provides analysis on
Urban Outfitters Inc.
(
URBN
),
Gap Inc
. (
GPS
) and
Abercrombie & Fitch Co
. (
ANF
).
Full analysis of all these stocks is available at
http://at.zacks.com/?id=2678
.
Here is a synopsis of all five stocks:
Bull of the Day
:
Apple, Inc.
(
AAPL
) reported a stellar first quarter that was primarily driven by
strong holiday season sales based on the ramp in demand for the new
iPhone 4S. Robust sales in the iPad and Mac series also chipped in,
registering a strong quarter for the company.
We believe Apple remains the biggest growth story in the
technology sector, primarily on account of its superior product
pipeline, Apps, strong iCloud revenues, the iPad 3, a loyal
customer base and international expansion going forward. Despite
the legal complexities and increasing competition in iPad and
iPhone segments, we are optimistic about the company's growth
prospects in the long term.
Moreover, we also expect Apple to succeed in developing markets
due to the growing affluence of the middle class in key markets.
Thus, we upgrade our rating from Neutral to Outperform with a
target price of $654.00.
Bear of the Day
:
We are downgrading our recommendation on
XL Group Plc
(
XL
) to Underperform from Neutral based on the weak fourth quarter
performance. The company posted a loss, comparing unfavorably with
the Zacks Consensus Estimate. XL delivered lower numbers largely
due to higher catastrophe losses, lower levels of positive
prior-year loss development and higher tax expenses.
A soft property and casualty environment will continue to
restrict top-line growth. Moreover, the current interest rate
environment and exposure to the credit market will hurt investment
income to some extent.
Our six-month price target of $20.00 per share equates to about
10.8x our earnings estimate for 2012. Combined with the $0.44 per
share annual dividend, this target price implies an expected total
negative return of 7.1% over that period. This is consistent with
our Underperform recommendation on the stock.
Latest Posts on the Zacks
Analyst Blog
:
Urban Outfitters Upgraded
We recently upgraded our recommendation on
Urban Outfitters Inc.
(
URBN
), the retailer of apparel, footwear and accessories, to Neutral
with a price target of $30.00, given its initiatives to reposition
itself as it enters into fiscal 2013. Earlier, we had an
Underperform rating on the stock.
The Drivers
Being a multi-brand and multi-channel retailer, Urban Outfitters
offers a flexible merchandising strategy. The company also has a
significant domestic and international presence with rapidly
expanding e-commerce activities. It remains committed to improve
comparable-store sales performance, adding new brands and
optimizing inventory level.
Further, to increase customer count, the company plans to
augment store openings in North America and Europe, open retail
outlets in Asia, enhance online and mobile marketing endeavors,
increase wholesale distribution in Europe and Asia, and
considerably expand direct-to-consumer business worldwide.
Moreover, the company's debt-free balance sheet also augurs well
for future growth.
The company also remains rationale in opening new stores, having
opened 33, 46 and 57 stores in fiscal 2010, 2011 and 2012,
respectively. It now plans to open 55 to 60 stores in fiscal 2013.
Urban Outfitters hinted that it is targeting a low double-digit
square footage growth. With a current total store count of 429,
there still exists room for more.
Urban Outfitters has been trying to manage its inventory at an
appropriate level, which has long weighed down on the company's
margins. The company in order to clear its inventory was compelled
to offer discounts that hurt its margins.
Total inventories were $250.1 million at the end of fiscal 2012,
which reflects an increase of 8.9% year over year, and appears to
be in a much better shape. Further, management's effort of driving
traffic through store expansion, product enhancement,
direct-to-consumer efforts and online initiatives bode well for the
company.
Urban Outfitters, which competes with
Gap Inc
. (
GPS
) and
Abercrombie & Fitch Co
. (
ANF
), currently holds Zacks #3 Rank that translates into a short-term
Hold rating, and correlates with our long-term recommendation.
Get the full analysis of all these stocks by going to
http://at.zacks.com/?id=2649
.
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
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and events impacting stocks and the financial markets.
About Zacks Equity Research
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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.
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APPLE INC (
AAPL
): Free Stock Analysis Report
ABERCROMBIE (
ANF
): Free Stock Analysis Report
GAP INC (
GPS
): Free Stock Analysis Report
URBAN OUTFITTER (
URBN
): Free Stock Analysis Report
XL GROUP PLC (
XL
): Free Stock Analysis Report
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