For Immediate Release
Chicago, IL - November 22, 2011 - Zacks Equity Research
highlights
Garmin Ltd.
(
GRMN
) as the Bull of the Day and
Hartford Financial Services Group
(
HIG
) as the Bear of the Day. In addition, Zacks Equity Research
provides analysis on
Hewlett-Packard
(
HPQ
),
eBay
(
EBAY
) and
Boeing
(
BA
).
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
:
Garmin Ltd.
(
GRMN
) is an OEM of GPS-based equipment. September quarter earnings
thrashed the Zacks Consensus Estimate and 2011 guidance was raised.
Garmin s market share, brand equity, compelling new products across
segments, significant diversification of revenue, strategic
alliances and financial position may be expected to offset the
negative impact of a secular decline in its core PND business.
We are buyers of the shares at the current valuation, since we
believe that Garmin has the position and financial muscle to
overcome the fierce competition, pricing pressure and PND
cannibalization by smartphones. Garmin's current trailing 12-month
earnings multiple is 14.0X, compared to the 16.2X average for the
peer group and 17.0X for the S&P 500.
We note that Garmin's expected earnings growth rate of 15.0%
over the next 5 years is similar to the 15.5% growth expected of
its peers, but significantly higher than the S&P 500, which
indicates upside. We therefore have an Outperform rating on Garmin
shares and raise our target price to $42 (17.1X 2011 EPS).
Bear of the Day
:
We are downgrading our recommendation on
Hartford Financial Services Group
(
HIG
) to Underperform based on its weak third quarter results. The
results surpassed the Zacks Consensus Estimate but declined from
the year-ago quarter, primarily due to poor operating performance,
with most segments reporting net losses or reduced income.
Moreover, higher catastrophe losses coupled with decline in net
investment income also contributed to the dismal performance. We
remain concerned with the company's variable annuities and rate
declines amid the volatile economy.
Our six-month target price of $16.00 per share equates to about
7.4x our earnings estimate for 2011. Combined with the $0.40 per
share annual dividend, this target price implies an expected
negative total return of 5.9% over that period. This is consistent
with our Underperform recommendation on the shares.
Latest Posts on the Zacks
Analyst Blog
:
Hewlett-Packard Clears Low Q4 Hurdle
Considering that PC giant
Hewlett-Packard
(
HPQ
) wallowed through a shake-up in its front office, replacing CEO
Leo Apotheker -- after he announced H-P would be getting out of its
core PC business -- with former
eBay
(
EBAY
) CEO Meg Whitman -- who almost immediately announced H-P would
retain the business after all -- the company's modest beat on both
top and bottom lines look pretty good for the company's fiscal 4th
quarter 2011 (ended October). Earnings per share (
EPS
) of $1.17 beat the Zacks Consensus Estimate of $1.13 per share.
Revenues also modestly surprised to the upside at $32.1 billion in
the quarter. As a result, H-P was able to make back more than half
of its 4% loss in regular Monday trading (a fairly bloody Monday,
with the Dow down over 300 points before rallying back to -248 by
the close) in the after-market.
For the 4th quarter, analyst following H-P had been holding pat
ahead of the report. There has been literally no movement in the
consensus EPS estimate over the last 90 days. For Q1 2012 and
fiscal 2012, however, several downgrades were cited -- 7 of the 23
analyst estimates had gone lower for the January quarter, and 6 had
been downwardly revised for next fiscal year.
That said, H-P has guided even lower for next quarter. Consensus
had been $1.11 including the lowered revisions, but H-P's outlook
now expects only 83-86 cents per share in its Q1.
Clearly, CEO Whitman has her work cut out for her. Adding to the
company's potential woes -- and more articulation is being sought
in the ongoing conference call for Hewlett-Packard -- are the
recent floods in Thailand and an expected severe shortage in the
company's hard disk drive market. Also, a potential price war in
the printing space may be forthcoming.
Perhaps these issues are baked into the cake for H-P's Q1 guidance.
But for right now, Hewlett-Packard not falling on its face during
its transitional phase is bringing out the bull sentiment in
after-hours traders.
Turkey
with a Side of Data
We get the second look at the GDP data for the third quarter on
Tuesday. While there is not expected to be a change in the overall
growth rate of 2.5%, the composition of the growth will probably
shift, and shift for the better, with more coming from net exports
and consumer spending, offset by an even bigger drag from inventory
investment. The minutes of the November 2nd Fed meeting also come
out on Tuesday, which could provide some insight into why the Fed
decided against doing anything at their last meeting.
On Wednesday we get the Personal Income and Personal Spending
report. Both are expected to rise by 0.3%, meaning that the savings
rate will stabilize at the very low level of just 3.6%. A falling
savings rate gooses the economy in the short term, but is not
healthy over the long term, and in recent months has fallen
significantly.
Eventually spending growth has to be supported by income growth. In
September income rose just 0.1% and spending was up 0.6%. The
sources of income are almost as important as the total growth of
income, and of late the sources have not been great. What meager
income growth there is has been flowing to the top of the income
distribution, and is not widely dispersed.
We also get New Orders for Durable Goods, which are expected to
decline by 1.0% on top of a 0.6% decline in September, but mostly
due to the very volatile transportation equipment sector. Excluding
transportation, orders are expected to be unchanged after surging
1.8% last month. Next month, though, it is likely that the
transportation equipment segment will surge as
Boeing
(
BA
) just got some very large orders from the Middle East.
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
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
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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.
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BOEING CO (
BA
): Free Stock Analysis Report
EBAY INC (
EBAY
): Free Stock Analysis Report
GARMIN LTD (
GRMN
): Free Stock Analysis Report
HARTFORD FIN SV (
HIG
): Free Stock Analysis Report
HEWLETT PACKARD (HPQ): Free Stock Analysis
Report
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