We are downgrading our recommendation to Underperform for
Telefonica (
TEF) due to its conflict with Portugal Telecom for the full control of their Brazilian wireless joint venture.
Despite solid results, Telefonica remains challenged by a weak Spanish economy which is contributing to sustained erosion in the domestic wireline voice business. Additionally, reduced tariff rates imposed by Spanish and
European regulations are tightening wireless revenue per user.
We also remain cautious with regard to the carrier's aggressive acquisition strategy, increasing competitive exposure and a highly leveraged balance sheet. Accordingly, we lower our price target to $53 per share, based on 8.4x our 2010 EPADS estimate.
Zacks Investment Research
July 12, 2010 | Filed Under
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TOT) weak near- to medium-term production outlook and the risks related to the present constrained commodity environment have led us to downgrade the long-term recommendation for the stock to Underperform from Neutral with a target of $42.00.
In the near term, oil prices are expected to remain weak due to moderation of global oil demand in general and China in particular. All this will bring down production and affect refining margins, leading to poor financial performance by the company.
We are also concerned about the company's high level of capital spending, which may result in reduced returns going forward.
Zacks Investment Research
July 9, 2010 | Filed Under
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MON) is a leading global provider of agricultural products to farmers. But an intense competitive environment and the company's huge dependence on a few large customers present a risk to its top line.
Monsanto also faces foreign currency risk since a significant portion of its income comes from outside the U.S.
We reiterate our Underperform recommendation on the stock based on weak results for three consecutive quarters. We believe this will continue based on the 2010 guidance provided by management, which is 43% lower than fiscal 2009.
Our long-term Underperform recommendation on the stock indicates that we feel it will perform below the broader market. Our $41.00 target price, 16.4X 2011 EPS, reflects this view.
Zacks Investment Research
July 8, 2010 | Filed Under
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ALKS) reported a fourth quarter fiscal 2010 net loss of $0.12 per share compared with a loss of $0.13 in the year-ago period. Revenues in the quarter slipped 12.3% due to lower manufacturing revenues for Risperdal Consta.
We believe that even if Alkermes diabetes candidate Bydureon is approved by the US FDA later in the year (target
date: October 22, 2010), the final label will contain warnings regarding the risk of pancreatitis and thyroid cancer. Furthermore, the candidate will face intense competition once it enters the market.
In view of these factors, we downgrade the stock to Underperform from Neutral with a price target of $11.00.
Zacks Investment Research
July 7, 2010 | Filed Under
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BWLD) posted better-than-expected first quarter 2010 results, but the company witnessed volatility in chicken wing prices, and surprisingly soft
comparable-store sales growth is sending an ominous signal.
Moreover, fierce competition from other casual dining operators to woo budge-constrained consumers may weigh upon the company's results. Also, the uncertain economic environment poses a serious threat to the company.
Thus, we remain apprehensive on the stock and have downgraded our rating from Neutral to Sell.
Zacks Investment Research
July 6, 2010 | Filed Under
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We expect <b>Pepco Holdings, Inc.</b> (<a href=http://www.zacks.com/stock/quote/pom>POM</a>) to face stiffer competition from its fully regulated peers with similar dividend yields, such as Progress Energy. Thus, we expect Pepco shares to Underperform its peers in the future.
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Pepco s $1.2 billion Mid-Atlantic Power Pathway (MAPP) transmission project is currently underway with an in-service date of 2014. However, the project could be delayed due to slower-than-expected load growth.
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We initiate coverage on Pepco with an Underperform recommendation as we expect the stock to face stiffer competition from its fully regulated peers with similar dividend yields, going forward. Our $14 target price values the stock at 11.3x 2011 EPS.
June 27, 2010 | Filed Under
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<B>NYSE Euronext, Inc.'s</B> (<a href=http://www.zacks.com/stock/quote/nyx>NYX</a>) first quarter earnings were flat compared to the Zacks Consensus Estimate in spite of expense management, improved derivatives markets and the successful integration of NYFIX acquisition.
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However, the company continues to suffer from weak trading volumes, which is directly affected by economic and market conditions, volatility of interest rates, inflation, changes in price levels of securities and the overall level of investors confidence. Except ETFs, weak volumes have been witnessed across equities, bonds and structured products of the company.
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Also, the current initiatives that are
being taken up by regulators and governments, such as restrictions on high frequency trading and taxes on securities transactions, are liable to have a materially adverse effect on overall trading volumes.
June 27, 2010 | Filed Under
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<B>Interactive Brokers Group's</B> (<a href=http://www.zacks.com/stock/quote/ibkr>IBKR</a>) first quarter 2010 earnings were substantially short of the Zacks Consensus Estimate. Earnings were also down from the prior-year quarter.
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The results declined due primarily to competitive pressure on spreads as a result of constrained liquidity and other market challenges. Dwindling equity market volatility in the past quarters continues to negatively impact the results of its Market Making segment.
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Though Interactive's fundamentals remain strong with a highly liquid balance sheet, strong capital position and high barriers to entry, significant international exposure and increased market risk could impact profitability in the upcoming quarters. Hence, we are maintaining an Underperform rating on the stock.
June 27, 2010 | Filed Under
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We reiterate our Underperform recommendation for <B>Greatbatch, Inc.</B> (<a href=http://www.zacks.com/stock/quote/gb>GB</a>), a leading producer and supplier of batteries, capacitors, and components used in implantable medical devices.
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The company reported tepid first-quarter 2010 results with earnings missing the Zacks Consensus Estimate. Profit was hit by lower sales due to declines across Orthopedic and
Vascular sub-segments.
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Although Greatbatch has been acquiring complementary businesses over the last few years to boost its top-line, we maintain a cautious approach as operating metrics are expected remain under pressure as customers lower inventory levels and defer spending on elective procedures.
June 27, 2010 | Filed Under
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Although <B>Bayer A.G.'s</B> (<a href=http://www.zacks.com/stock/quote/BAYRY>BAYRY</a>) first-quarter earnings per share of 1.20 Euros surpassed 0.91 Euros reported in the year-ago period, we are concerned about the disappointing performance of the CropScience segment in the most recent quarter. The delay in approval of Xarelto also concerns us.
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Furthermore, the failure of Nexavar to prolong the overall survival in patients suffering from advanced non-squamous non-small cell lung cancer (NSCLC) in a late stage study is a setback for the company.
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The competitive environment in which Bayer operates is a further challenge for the company. Given these factors, we downgrade the stock to Underperform from Neutral with a price target of $54.00.
June 27, 2010 | Filed Under
Stocks to Sell |
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