For Immediate Release
Chicago, IL – February 12, 2010 – Zacks Equity Research highlights Estee Lauder Companies (EL) as the Bull of the Day and Electronic Arts (ERTS) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Hewlett-Packard Company (HPQ), 3Com Corporation (COMS) and Cisco Systems Inc. (CSCO).
Full analysis of all these stocks is available at http://at.zacks.com/?id=5506
Here is a synopsis of all five stocks:
Estee Lauder Companies (EL) is one of the leading players in the global cosmetics space and commands a strong portfolio of well-established brands. The company is currently undertaking initiatives to reduce overheads and optimize inventory levels, which augur well for future operating performance.
Furthermore, Estee Lauder has a consistent track record of returning cash to shareholders in the form regular dividend payments. Our long-term recommendation on Estee Lauder is Outperform as we anticipate it to perform well above the broader market.
However, intense competition from established as well as regional and local players in its markets may limit the above-market performance of the company.
We are downgrading Electronic Arts (ERTS) to Underperform following dismal third-quarter results. Weakness in its EA business, poor holiday sales for the overall packaged goods sector in Europe and product mix shifts to lower-margin distribution business in North Americas hampered the company.
In addition, delays in launching new titles, lower restructuring benefits, weak traditional video game sales and the negative impact of foreign exchange led to disappointing guidance for the upcoming quarters. While the growth in the digital business and leaner cost structure may offset some of the decline in the packaged goods sales, we do not expect a turnaround in the near term.
Longer term, an increased focus on cost reduction, a strong balance sheet, a growing presence in digital distribution and the Playfish acquisition may add to growth. We lower our estimates for fiscal 2011 and set a price target of $14.
Latest Posts on the Zacks Analyst Blog:
H-P, 3Com Deal Set for EU Approval
The world’s largest computer manufacturer Hewlett-Packard Company (HPQ) is all set to get the approval from the European Union, to move ahead with its acquisition of network equipment manufacturer 3Com Corporation (COMS).
Hewlett Packard disclosed its plans of taking over 3Com Corporation in November 2009. The acquisition, valued at $2.7 billion, enables H-P to challenge networking leader Cisco Systems Inc. (CSCO) and grab an additional share of the networking business.
3Com’s expertise is in networking products for data centers, which supports H-P’s ProCurve networking equipment. Although the company has seen better times, it has been beefing up its portfolio by utilizing its design capabilities in low-cost China. The company is therefore in a position to compete aggressively on price. 3Com’s challenges include its poor brand value in American and European markets and its weak position in these geographies.
The H-P/3Com combination is therefore an ideal fit, in our opinion. When the deal closes, H-P will acquire a new capability overnight, strengthen its position in China and grow at its competitor’s expense. 3Com will benefit from H-P’s superior brand value and find a broader market for its new products.
As per a recent prediction by the technology research firm IDC, the Chinese IT services market has grown from $7.7 billion in 2007 to $9.5 billion in 2009. The firm predicts that this market will grow at a compound annual growth rate of almost 14% between 2008 and 2013. So we believe this is good news for H-P as it will be able to cash-in on Chinese IT growth through the 3Com route.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
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