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The Zacks Analyst Blog Highlights: Apple, QUALCOMM, Motorola Mobility Holdings, Microsoft and Dick's Sporting Goods - Press Releases

Posted: 3/16/2012 9:23:00 AM
Referenced Stocks: AAPL;DKS;MMI;MSFT;QCOM

For Immediate Release

Chicago, IL - March 16, 2012 - 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 Apple Inc.  ( AAPL ), QUALCOMM Inc.  ( QCOM ), Motorola Mobility Holdings Inc.  ( MMI ), Microsoft Corp.  ( MSFT ) and Dick's Sporting Goods Inc.  ( DKS ).

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Here are highlights from Thursday's Analyst Blog:

The Dutch Side with Apple

Apple Inc.  ( AAPL ) and Samsung Electronics' patent infringement battle stretches across various countries, with the latest focus shifting to the Dutch Republic.

Apple seemed to have scored a win this time, as The Hague District Court, Netherlands, has ruled in favor of the iPhone and iPad maker. Samsung had appealed for a ban on iPad and iPhones in the country, citing violation of a certain 3G wireless patent, according to Reuters.

Justifying its latest ruling, the court cited that Apple uses  QUALCOMM Inc.  ( QCOM ) baseband chips, which already has a licensing agreement with Samsung, thus ruling out Samsung's accusation of its 3G patent infringement.

Amidst the bickering between Apple and Samsung, industry sources reveal that the former has sought Samsung's touch-screen panels for its latest iPad. Though both the companies continue to fight tooth and nail for dominance in the tablet and smartphone markets, their business ties appear to be just as strong. For Apple, this makes perfect sense, given that supply constraints have always been more of a problem for it than weak demand.

Apple has also been pretty aggressive in protecting its intellectual property and has been using court rooms to counter competition in various countries. Except for a few failures, the company has seen success in many of the patent litigation cases that it has filed against Samsung and other fellow competitors such as HTC,  Motorola Mobility Holdings Inc.  ( MMI ) and  Microsoft Corp.  ( MSFT ).

We believe that Apple's legal tussles will continue, as competition heats up in the smartphone and tablet space. This will increase legal expenses and hurt Apple's operating profit going forward. Additionally, the impending lawsuits in different countries will remain an overhang on the stock going forward.

Despite these factors, we believe that Apple remains the biggest growth story based on its superior product pipeline, popular apps, the iCloud and iPhone 4S, and the "new iPad" and Apple TV, and loyal customer base.  With a solid balance sheet and robust revenues, we expect Apple to outperform its peers in the long run. Moreover, we also expect Apple to succeed in developing countries due to the growing affluence of the middle class in key markets.

We have an Outperform recommendation on Apple over the long term (6-12 months). Currently, Apple has a Zacks #1 Rank, which implies a Strong Buy rating in the near term.

  Earnings Scorecard: Dick's

A full-line sporting goods retailer,  Dick's Sporting Goods Inc.  ( DKS ) hit the bull's eye with its fourth quarter and fiscal 2011 earnings, which met the Zacks Consensus Estimate. The company's results kept afloat mainly on robust sales performance benefiting from store expansions and better margins.

The overall analyst sentiment for Dick's remains positive, driven by the company's consistent performance and a strong outlook. The current Zacks Consensus Estimate for first-quarter and fiscal 2012 are 38 cents and $2.41 per share, respectively, which is at the higher end of the company's recent earnings guidance range.

Agreement of Estimate Revisions

Following the company's recent quarter performance, estimate revision trend mostly remained in the positive direction with majority of analysts raising their estimates and only a few pulling down estimates. For the first quarter of 2012, 15 out of 22 analysts positively revised their estimates in the last 30 days whereas none of the analysts lowered their estimates in the same period.

For fiscal 2012, 15 out of 23 analysts moved up their estimates in the last 30 days while 2 analysts slashed the same. For fiscal 2013, estimate revisions in the last 30 days include 6 analysts raising estimates while none moving in the opposite direction.

However, there were no positive or negative revisions by analysts in the last 7 days for the first quarter of 2012, fiscal 2012 and 2013.

Magnitude of Estimate Revisions

The recent estimate revision trends point to an overall positive bias on the part of the analysts, which is reflected in the form of higher earnings estimates for the next quarter, fiscal 2012 and fiscal 2013 over the last 30 days. Estimates for the three reporting periods, however, remained stable over the last 7 days with no estimate revisions.

Driven by the positive revisions for first quarter estimate and the absence of any negative movement, the Zacks Consensus Estimate for the first quarter moved up by 2 cents in the last 30 days. The current first quarter estimate stands at 38 cents per share.

Majority positive estimate revisions for fiscal 2012 were only slightly offset by the fewer negative revisions in the last 30 days, driving estimates to move up by 3 cents to $2.41 per share. In the last 30 days, fiscal 2013 estimates rose by 6 cents to $2.76 per share on account of only upward estimate revisions and no downward revisions.

Our Recommendation

Pittsburgh-based Dick's Sporting Goods remains the dominant player in the industry with significant store expansion and potential share gain opportunities in the U.S. We remain optimistic about the company's competitive position and consistency of earnings growth.

Further, we remain impressed by the company's strategy of alternatively investing in key strategic areas including new stores, eCommerce, inventory management systems and private brands. In 2012, the company expects to spend a gross of $241 million toward capital expenditures while it expects net spending to reach $190 million.

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APPLE INC ( AAPL ): Free Stock Analysis Report
DICKS SPRTG GDS ( DKS ): Free Stock Analysis Report
MOTOROLA MOBLTY ( MMI ): Free Stock Analysis Report
MICROSOFT CORP ( MSFT ): Free Stock Analysis Report
QUALCOMM INC ( QCOM ): Free Stock Analysis Report
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