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Broadcom, Valeant Pharmaceuticals, Apple, Amazon and Netflix highlighted as Zacks Bull and Bear of the Day Broadcom, Valeant Pharmaceuticals, Apple, Amazon and Netflix highlighted as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL - January 26, 2017- Zacks Equity Research highlights Broadcom ( NASDAQ: AVGO - Free Report) as the Bull of the Day and Valeant Pharmaceuticals ( NYSE: VRX- Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Apple ( NASDAQ: AAPL- Free Report),Amazon (NASDAQ: AMZN- Free Report ) and Netflix (NASDAQ: NFLX- Free Report ) .

Here is a synopsis of all four stocks:

Bull of the Day:

Seems it was only a month ago I writing about Broadcom ( NASDAQ: AVGO - Free Report) as the Bull of the Day and explaining why I've been strongly recommending and trading the stock since 2014 from $70.

And it's true. I did choose AVGO on December 22 when it was trading around $180. Here's how I described this powerhouse technology company in that report...

3 Key Segments

Though Broadcom is generally classified as a semiconductor designer and developer, its solutions serve telecom and enterprise networking customers in the build-out of data centers and high-speed, broadband communications. I can't say for sure if AT&T , Cisco or Alphabet are customers, but I would be surprised if they weren't.

Thus about half of Broadcom's sales come from the Wired Infrastructure segment which has been seeing steady double-digit growth as these big customers transition to the 100 Gigabit Ethernet protocol.

Approximately 30% of Broadcom's revenues come from its Wireless Communications division which serves top-end mobile smart-device makers like Apple with radio frequency (RF) chips, amplifiers, and FBAR technology filters. Broadcom FBAR (Film Bulk Acoustic Resonator) filters are a form of bulk acoustic wave (BAW) filter that have superior performance with steeper rejection curves compared to surface acoustic wave (SAW) filters.

The third major segment at Broadcom is Enterprise Storage, which connects back with many customers from the Wired division and supplies just under 20% of revenues. The company's products enable the high-speed movement of digital data with a secure connection among multiple PCs, servers and storage devices such as hard disk drives and solid state drives.

While AVGO's Wireless business is "dependent" on Apple, that's not exactly a bad problem to have. The coming next wave of 5G technology will keep both companies rolling in sales growth.

And Broadcom's largest business, the Wired segment, is very busy meeting the demand of companies building high-speed, broadband networks, especially with the data-hogging loads of video and the storage requirements of the Internet of Things.

Bear of the Day :

I don't enjoy kicking this once-beloved company when it's down, but Valeant Pharmaceuticals ( NYSE: VRX- Free Report) has it coming (again) as earnings estimates slip.

In the past week, another investment bank revised lower their EPS projection for this year, knocking the the Zacks Consensus down to $5.17 from $5.30.

And in the past 90 days, the profit outlook has fallen from $7.70. This puts annual growth at -5.6% after a 2016 that could end up at over -30% "growth."

This is why VRX shares are in the cellar of the Zacks Rank again.

But it doesn't mean you should run out and sell yours only $1 from multi-year lows. The company is still projected to deliver nearly $9.2 billion in sales this year with hundreds of products and steady earners like Jublia and Wellbutrin.

The unknown risks are what happens with any legal investigations or the company's massive debt load. The current debt-to-equity ratio is over 7X for this $4.7 billion company and the debt-to-capital ratio may be over 87X.

Analysts Weigh In On the Debt Issue

On January 11, Canaccord Genuity analyst Neil Maruoka was encouraged by Valeant's recent moves to address the leverage...

"Valeant has taken its first significant steps towards de-levering its balance sheet, announcing the divestiture of Dendreon and several dermatology brands (including CereVe) for combined cash consideration of ~$2.1 billion."

The analyst noted that the downside of this move is that the company may be forced to sell more quality drug franchises like CereVe, thus hurting sales and operating cash flow. "Following these divestitures, we estimate that Valeant will have total debt of $28.3 billion remaining, representing a leverage ratio of 6.9x forward EBITDA (down from 7.1x previously)."

On January 20, Deutsche Bank reiterated their Hold rating on VRX shares and dropped their price target from $24 to $20. Analyst Gregg Gilbert talked about the company's challenges...

"We expect VRX to provide its 2017 outlook sometime between now and when it reports 4Q results (date not yet set). Recall that management provided 'hand signals' on its 3Q call in November that revenue and EBITDA would be down in 2017 vs. 2016. In anticipation of this event, we have updated our model to reflect recent developments and management commentary. The key elements of our changes relate to recently-announced divestitures, loss of exclusivity (LOE) for several products in 2016/17, and FX headwinds."

Additional content:

Apple 'Hopeful' About Future iPhone Manufacturing in India

On Wednesday, Apple ( NASDAQ: AAPL- Free Report) executives met with government officials of India to discuss plans about manufacturing iPhones in the country.

Like many tech corporations-think Amazon (NASDAQ: AMZN- Free Report ) and Netflix (NASDAQ: NFLX- Free Report ) - Apple is eager to begin assembling its iPhone in India, which has become one of the world's fastest growing smartphone markets in recent years. Apple currently only has a tiny market share in the country, and is ready to start bolstering its stagnate global sales. The company even applied to open retail stores in India last year.

"We've been working hard to develop our operations in India," Apple said in a brief statement. "We appreciate the constructive and open dialogue we've had with government about further expanding our local operations."

The tech giant's plans to set up an iPhone production plant was initially reported on by Times of India . The newspaper reported that the factory would be built in partnership with Taiwan-based manufacturer Wistron.

According to CNNMoney , India has over 300 million smartphone users, or 18% more than last year. Apple, then, has much to gain if it can build a successful iPhone production plant in the country. However, Apple's products are not cheap, and most of India's 1.3 billion people have an average annual income of $1,500.

Zacks' Top 10 Stocks for 2017

In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?

Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>

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Broadcom Limited (AVGO): Free Stock Analysis Report

Valeant Pharmaceuticals International, Inc. (VRX): Free Stock Analysis Report

Apple Inc. (AAPL): Free Stock Analysis Report

Amazon.com, Inc. (AMZN): Free Stock Analysis Report

Netflix, Inc. (NFLX): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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