Kroger (KR)
Kroger (<a href=http://www.zacks.com/stock/quote/kr>KR</a>) reported better-than-expected first quarter earnings per share, beating our estimate by $0.04 per share. We are increasing our EPS estimates for this year and next to reflect the first quarter upside. <p> For fiscal year 2009, Kroger expects identical-store sales of 3% to 4% and earnings per share of $2.00 to $2.05. That said, we still believe that the company may be able to beat its fiscal year 2009 EPS guidance, due to a higher mix of private-label brand sales and continued market share gains. <p> We reiterate our Buy rating on Kroger shares. Our six-month target price is $28, up from $27.
July 5, 2009 | Filed Under Stock Picks | Leave a Comment
Cirrus Logic (CRUS)
Cirrus Logic, Inc. (<a href=http://www.zacks.com/stock/quote/crus>CRUS</a>) is a fabless OEM of analog, mixed-signal and digital processing integrated circuits (ICs). The company's 4Q results were in line with our expectation. <p> On the positive side, CRUS reflects a strong balance sheet with no debt. The company has also provided decent 1Q 2010 guidance. Cirrus' new product offerings are expected to benefit end customers. <p> The seismic product line remains a strong growth area and should help increase revenue going forward. This group should maintain its growth even after factoring in the changes in oil price. Our recommendation remains a BUY with a price target of $5.50.
July 5, 2009 | Filed Under Stock Picks | Leave a Comment
Strayer Education (STRA)
Financial results for the past thirteen quarters at Strayer Education (<a href=http://www.zacks.com/stock/quote/Stra>STRA</a>) have been above expectations, and management's guidance for 2009 portends continued double-digit EPS growth. <p> The company benefits from positive pricing through annual 5% tuition increases with the 2009 tuition increase having been announced concurrent with the third quarter earnings report. <p> Despite the stock's valuation being in the upper-half of the historical range, the stock is rated a Buy.
July 5, 2009 | Filed Under Stock Picks | Leave a Comment
Research in Motion - RIMM
<B>Research In Motion</B> (<a href="http://www.zacks.com/stock/quote/RIMM">RIMM</a>), the manufacturer of BlackBerry'smart-phone devices, continues with robust financial performance in spite of facing a global economic recession and an extremely competitive industry. <P ALIGN="left"> The company's first quarter (ended May 30) financial results were above our expectations. Highend Blackberry handsets experienced significant market traction as the company maintains the momentum of net new subscriber additions. Sequential improvement of gross margin is another positive factor. <P ALIGN="left"> We expect the smart-phone device market to gain further momentum should economic conditions improve and as demand for portable mobile access remains firm on a global basis. <P ALIGN="left"> RIMM has a solid pipeline of innovative feature-rich products to be launched by mid fiscal 2010. Management also provided an encouraging financial outlook. <P ALIGN="left"> We maintain our Buy recommendation with a higher valuation target. <P ALIGN="left">
July 5, 2009 | Filed Under Stock Picks | Leave a Comment
AMAG Pharmaceuticals (AMAG)
AMAG Pharmaceuticals Inc. (<a href=http://www.zacks.com/stock/quote/amag>AMAG</a>) develops superparamagnetic iron oxide nanoparticles for use in pharmaceutical products. The company's focus is on developing IV iron replacement therapy for anemia in chronic kidney disease and imaging agent to aid in diagnosis. <p> The company filed the NDA for its lead drug Feraheme in December 2007, and the drug was approved by the FDA on June 30, 2009. Clinical data in over 1,700 patients indicate an excellent safety profile for the drug with lower incidents of heart problems. <p> Clinical results and eventual approval for additional indications should ensure strong growth in the coming years. We maintain our Buy rating on the shares of AMAG with a target price of $62.
July 5, 2009 | Filed Under Stock Picks | Leave a Comment
Gerdau S.A. (GGB)
We are keeping our Sell recommendation on Gerdau S.A. (<a href=http://www.zacks.com/stock/quote/ggb>GGB</a>) based on poor first quarter results and the worldwide crises. The company successfully renegotiated part of its debt and banks accepted to relieve some covenants. <p> The company's strategy to grow through acquisitions based on debt created huge leverage and financial debt is expected to increase in the short-term. The huge decline in steel prices and the international economic slowdown creates a more challenging business environment for the steel industry. <p> The company's strategy to grow through acquisitions based on debt is contributing to the negative news. Moreover, huge exposure to the U.S. market during a recession is a major concern.
July 5, 2009 | Filed Under Stocks to Sell | Leave a Comment
Cemex (CX)
We are keeping our Sell rating on CEMEX, S.A. de C.V. (<a href=http://www.zacks.com/stock/quote/cx>CX</a>). The company posted weak results in the first quarter of 2009 with net income of just US$3 million. <p> The continued weak cement volumes in Spain and U.S. are problematic. The short-term outlook for the company remains highly uncertain based on the downtrend in the residential, industrial/commercial and the infrastructure sectors as well as due to the fall in the real estate prices throughout the world. Moreover, the recent lawsuit filed against the company is problematic. <p> However, all efforts to reduce its costs and net debt in 2009 are encouraging. Nevertheless, the current credit crunch and the recession in the U.S. are matters of huge concern.
July 5, 2009 | Filed Under Stocks to Sell | Leave a Comment
Red Robin Gourmet Burgers (RRGB)
We believe shares of Red Robin Gourmet Burgers (<a href=http://www.zacks.com/stock/quote/rrgb>RRGB</a>) will continue to underperform both the larger market and the restaurant industry. <p> Red Robin's traffic began declining long before the onset of rising gas prices in October 2007, which began choking business in the casual dining sector -- a victim of poor site selection in new markets. In spite of their poor performance, the company has retained and even added to these sites as it repurchased 45 franchises since 2005. <p> Moreover, 2009 consensus EPS estimates are 10% higher than ours, and we think our estimate may prove aggressive if the economic slowdown is deeper or more protracted than we currently anticipate.
July 5, 2009 | Filed Under Stocks to Sell | Leave a Comment
Canon Inc. - CAJ
We believe the sharp appreciation of the yen is eroding <B>Canon's</B> (<a href="http://www.zacks.com/stock/quote/CAJ">CAJ</a>) revenue and profits. <P ALIGN="left"> Canon's first-quarter 2009 results were mixed with revenue below expectations while earnings slightly exceeding our expectation. The company expects to improve profitability through product launches and cost cutting efforts. As a result CAJ raised its earnings forecast for the full year 2009, still below 2008 level. <P ALIGN="left"> We expect revenue in 2009 to be hurt by weak consumer spending and believe the company will struggle to meet expectations in fiscal 2009. We maintain our estimates for the full year 2009. <P ALIGN="left"> Given this, we don't see room for meaningful appreciation from current levels. We maintain our Sell recommendation on CAJ with a 6-month target price of $25.00. This price is based on a P/E multiple of 26.6x our EPADR estimate of $0.94 for 2009, a discount to the industry mean. <P ALIGN="left">
July 5, 2009 | Filed Under Stocks to Sell | Leave a Comment
Palm, Inc. (PALM)
Although 4Q09 revenue declined by 70.7% y-o-y and the loss increased y-o-y, results for Palm, Inc.'s (<a href=http://www.zacks.com/stock/quote/palm>PALM</a>) quarter were better than expected due to the ramp up in Treo Pro shipments and strong domestic and international carrier interest in its Web OS platform. <p> Although Palm has had some initial success with the Pre, its next-gen phone, we have doubts on its success as it competes with several much larger competitors such as BlackBerry and iPhone. As the Palm Pre was launched in June, we expect that its impact will be better reflected in the first quarter of fiscal 2010. <p> Palm has struggled to match supply with demand for the new handset. We have a low confidence on long-term prospects, so we reiterate our Sell rating on Palm but raise our six-month price target to $8.00.
July 5, 2009 | Filed Under Stocks to Sell | Leave a Comment