For Immediate Release
Chicago, IL – February 1, 2010 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Microsoft Corporation (MSFT), Hewlett Packard Company (HPQ), Google Inc. (GOOG), Yahoo! Inc. (YHOO) and AstraZeneca (AZN).
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Here are highlights from Friday’s Analyst Blog:
Microsoft Rides High on Windows 7
Microsoft Corporation (MSFT) reported second quarter 2010 earnings that beat the Zacks Consensus Estimate by 16 cents, or 27.12%. Revenue beat by 6.4%.
MSFT’s revenue surprise was driven by growing attach rates and inventory builds for Microsoft’s Windows 7 operating system on consumer PC platforms.
Eleven of the 32 analysts polled by Zacks have made upward revisions to their earnings estimates on MSFT over the past 30 days, as checks indicated very strong attach rates for the Windows 7 OS during the last quarter.
The surprise history is also very encouraging. Microsoft earnings have beaten the Zacks consensus by an average of 10.46% during the four preceding quarters. Further, the positive surprise from MSFT has been growing in each successive quarter, having beaten the Zacks Consensus by 25.00% in the Sep 2009 quarter.
However, Microsoft’s second quarter earnings excluding the recognition of deferrals related to Windows 7 would reduce earnings by $0.19, resulting in a miss of $0.03. This could be the reason for the slight downward movement in the MSFT share price despite the huge quarter.
December 2009 was a very strong quarter for Microsoft, in which the Windows attach rate started climbing. We believe this is a very significant quarter for MSFT, as the adoption in the new-age netbook market was strong. We think Microsoft is poised to benefit from new product cycles in both the enterprise PC and server markets. MSFT has also entered into a three-year agreement with Hewlett Packard Company (HPQ) for its cloud computing solutions.
MSFT is also making strides in the still-small Online Services Business, where an agreement with HP ensures that Bing will be the default search engine on most of its PCs. Bing’s U.S. market share continues to inch upwards, with the search engine growing slightly stronger than Google Inc. (GOOG) in December (ComScore). Although the agreement with Yahoo! Inc. (YHOO) is still pending regulatory approval, this could help the company acquire additional expertise in the space.
AZN Misses, Guidance Disappoints
Yesterday, AstraZeneca’s (AZN) fourth quarter earnings came in at $1.42 per American Depositary Shares (ADS), well below the Zacks Consensus Estimate of $1.57. However, earnings increased 13.6% compared to the year-ago period. Revenues increased 4% at constant exchange rates (CER) to $8.9 billion compared to the same period last year.
The primary reasons for the increase in revenues were strong US sales of Toprol-XL benefiting from the withdrawal of a generic, US sales of H1N1 vaccine and robust growth in emerging markets. For the full year, AstraZeneca reported revenues and EPS of $32.8 billion (7% growth at CER) and $6.32, (23% growth at CER), respectively. AstraZeneca recorded strong sales across all geographies during the quarter. Sales in North America, Emerging Markets and Established Markets increased (at CER) by 4%, 10% and 2%, respectively.
AstraZeneca has outlined a tough scenario for 2010. The company expects core earnings per ADS in the range of $5.75 – $6.15. Although the guidance is in line with the Zacks Consensus Estimate of $5.97 per ADS, it is lower than $6.32 reported in 2009. Moreover, due to the potential loss of market exclusivity of Arimidex and Pulmicort Respules in the US, the company expects a mid single-digit decline in revenue based on CER in 2010. Shares were down 5.4% at the end of the day following the disappointing guidance.
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