Zacks Bull and Bear of the Day Highlights: Helmerich & Payne, GlaxoSmithKline, Amazon.com, Toyota Motor and CTS Corp. - Press Releases
For Immediate Release
Chicago, IL – February 1, 2010 – Zacks Equity Research highlights Helmerich & Payne (HP) as the Bull of the Day and GlaxoSmithKline (GSK) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Amazon.com (AMZN), Toyota Motor (TM) and CTS Corp. (CTS).
Full analysis of all these stocks is available at http://at.zacks.com/?id=5506
Here is a synopsis of all five stocks:
Helmerich & Payne (HP) is a leading drilling contractor with activities in the U.S. and overseas.
The company, with its young, efficient drilling fleet, has been able to snag market share and maintain a relatively higher utilization due to stronger drilling demand and longer duration of term contracts for their technologically sophisticated FlexRigs. A relatively conservative financial policy and the quality of its client base, which mostly includes well-capitalized oil majors or large independents, are other positives in the Helmerich & Payne story.
The recent turnaround in domestic drilling activity also bodes well for the company. As such, we recommend an Outperform rating for Helmerich & Payne shares.
GlaxoSmithKline (GSK) reported third quarter income of $0.92 per American Depositary Share (ADS), 3 cents below the Zacks Consensus Estimate. The company reported earnings of $0.94 in the year-ago period.
Third quarter revenue increased 3%. While the company's diversified base and presence in different geographical areas should help support revenues, we remain concerned about future growth prospects given the patent challenges being faced by several of Glaxo's products. With several products expected to lose exclusivity and the swine flu opportunity likely to miss expectations, we expect the company's topline to remain under pressure in the coming quarters.
Glaxo's pipeline needs to deliver in order to make up for lost revenues and any development or regulatory setbacks would be a major disappointment for the company. We have downgraded the stock to Underperform with a target price of $37.
Latest Posts on the Zacks Analyst Blog:
Amazon Profits Up as Margins Slide
Amazon.com’s (AMZN) fourth quarter earnings beat the Zacks Consensus Estimate by 14 cents. AMZN's results were driven by the very strong revenue growth characteristic of a recession-free fourth quarter. This is very encouraging, as Amazon.com appears to be one of the very few companies to report pre-recession type revenue growth in the December quarter.
The company has a very strong earnings surprise history, with a four-quarter average of 23.58%, signifying that AMZN has beaten the Zacks Consensus Estimate by an average of 23.58% during this period. Shares are up 2% from yesterday's close in response to the positive news.
The North America Media business grew 48.7% sequentially and 19.8% from the year-ago quarter. The segment gained momentum in the last quarter, after registering the first positive growth in September. The business has not recorded any year-over-year declines, despite the recession.
Electronics and General Merchandise (EGM) increased 105.9% sequentially and 53.5% from the year-ago quarter. Both growth rates were significantly higher than in the third quarter. Results were driven by better pricing from suppliers, better selection and partially offset by more competitive prices offered to customers.
North America generated a gross margin of 23.6%, down 284 basis points (bps) sequentially and up 210 bps year over year. The year-over-year increase was largely due to higher Other revenue, better inventory management and better supplier prices, offset by weaker customer prices and mix. The sequential decline was on account of offers and other holiday-related incentives and discounts.
International generated a gross margin of 17.7%, down 233 bps sequentially and 79 bps year over year. The decline in international was related to lower customer prices and unfavorable mix, although the company did benefit from better inventory management and vendor pricing.
The pro forma gross margin on a consolidated basis for AMZN was 20.8%, down 260 bps sequentially and 65 bps year over year.
Buy Into CTS Post-Selloff?
At some point in the past week, investors became concerned the Toyota Motor (TM) sudden acceleration recall was perhaps about to impact CTS Corp. (CTS). The shares, which traded as high as $10.36 in early January, traded down to $7.68 as of yesterday’s close. CTS issued two press releases and spent a great deal of time on its quarterly conference call trying to ease investors' concerns.
Specifically, CTS stated that since the problem of sudden unintended acceleration has been reported to have existed in some Lexus vehicles and Toyota vehicles going back to 1999 when CTS did not even make this product for any customer. CTS believes that the rare slow return pedal phenomenon, which may occur in extreme environmental conditions, should absolutely not be linked with any sudden unintended acceleration incidents.
Further, the firm went on to say it is not aware of any accidents and injuries caused by the rare slow return pedal condition, to the best of its knowledge.
Management pointed out it does not, and has never made, any accelerator pedals for Lexus vehicles and that CTS also has no accelerator pedals in Toyota vehicles prior to model year 2005.
Our View
CTS remains well positioned to achieve solid revenue growth and operating leverage as end markets turn around in the long run, given the company’s competitive advantage led by innovation and laser-like focus on expense management. The slower-growing EMS segment has been exceptionally diversified since 2004 and is a complement to the faster-growing Sensors and Actuators and Electronic Components business.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
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