For Immediate Release
Chicago, IL – August 14, 2009 – 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: International Business Machines (IBM), Cisco (CSCO), Hewlett Packard (HPQ), Dell Inc. (VZ) and Citigroup Inc. (C).
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Here are highlights from Thursday’s Analyst Blog:
IBM Set to Outperform
The drivers behind our Outperform rating on International Business Machines (IBM) are the company’s strong fundamentals, substantial free cash flow, strong earnings momentum, improving operating performance, effective restructuring initiatives and new growth opportunities.
IBM is the leader in software, services and storage business. Its second-quarter results beat the Zacks Consensus, fueled by higher gross margins and cost controls. With continued cost-cutting efforts, the company raised its 2009 profit guidance by 50 cents to $9.70 per share. Despite falling sales, IBM’s efforts to generate earnings through a combination of margin expansion, growth initiatives, acquisitions, expected benefits from retirement-related costs and effective capital deployment are commendable.
IBM has been better insulated from the recent weakness in the U.S. economy than many of its peers owing to a large international revenue base. Moreover, management returns value to customers through regular share repurchases and dividend payouts. We believe that with a strong liquidity position, operational efficiency and improving profitability, IBM is well positioned to benefit from the market recovery.
We also believe the company’s strong position in the Services and Storage business, growth in Analytics solution revenue and focus on investments in diverse technologies with high growth potential further add to its prospects.
However, we are cautious of currency fluctuations which are hurting sales and may be critical to earnings growth. Apart from this, increasing competition from Cisco (CSCO), Hewlett Packard (HPQ) and Dell Inc. (VZ) threaten IBM’s market share.
Consultants Review Citi Management
U.S. regulators have forced Citigroup Inc. (C) to hire external consultants who will analyze whether the company’s current management has the caliber to lead it out of the ongoing financial crisis.
Citigroup has entered an agreement with the Federal Deposit Insurance Corp. (FDIC) that requires increased scrutiny of the bank and also requires it to fix financial, managerial and governance issues. Recruitment firm Egon Zehnder has been retained by Citigroup to carry out a comprehensive, in-depth management review as requested by the U.S. government following the stress tests conducted in May 2009.
Citigroup is required to submit a plan of action about possible managerial changes to its board and regulators by the time it reports its third quarter results in October 2009.
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