For Immediate Release
Chicago, IL – February 19, 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: Priceline.com (PCLN), Humana Inc. (HUM), Aetna Inc. (AET), Cigna Corp. (CI) and Darden Restaurants, Inc. (DRI).
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Here are highlights from Thursday’s Analyst Blog:
Priceline Beats, Guidance Strong
Priceline.com (PCLN) reported very strong fourth quarter results, with earnings beating the Zacks Consensus by 33 cents and revenue beating by 2.6%. Shares were up 0.79% during the day, but jumped 6.33% after-hours in response to the news.
Revenue of $541.8 million was down 25.9% sequentially in the seasonally softer fourth quarter but increased a whopping 33.4% from the year-ago quarter, reflecting a much higher level of business than the recession-hit Dec 2008 quarter.
The year-over-year growth in revenue was also much stronger than management’s own expectations of a 24-28% increase. This was mainly due to room night growth and stabilization in average daily rates (ADRs). As expected, currency had a positive impact on revenue in the last quarter.
Overall, room nights grew 59.9%, airline tickets 16.1% and rental car days 6.6%. Hotel revenue benefited from the stronger bookings, as well as the 1% decline in international ADRs and 7% decline in domestic ADRs, which were significantly better than the year-ago period.
Humana to Reduce Workforce
Humana Inc. (HUM) announced recently that it intends to reduce its workforce by approximately 5% (1,400 jobs on a net basis) in 2010 due to a reduction in enrollment. Jobs will be cut through a combination of attrition, process efficiencies, outsourcing and position eliminations.
On a gross basis, the insurance giant intends to cut 2,500 jobs nationwide in 2010. However, during the course of the year the company intends to add about 1,100 jobs in areas such as medical cost containment capabilities, pharmacy management and specialty products.
Humana announced further that all employees impacted by the workforce reduction will have a 2 month transition period at the company. Furthermore, those failing to secure another position within the company will be offered a severance package and their health and other benefits will be continued.
The jobs cut is necessitated by the drop in medical enrollment at Humana in fiscal 2009. Overall medical membership declined approximately 11% (almost 1.3 million members) in 2009. Humana ended 2009 with about 10.3 million members. Medicare membership saw the greatest fall. Medicare membership was down by about 23.7% to 3.4 million.
Even though the recently announced fourth quarter 2009 results were favorable helped by the strong performance of the Government segment, we remain concerned about the weakness in the commercial segment. Humana and other insurers are facing a drop in enrollment in their commercial segment. Other insurers like Aetna Inc. (AET) and Cigna Corp. (CI) have also resorted to job cuts to tide over difficult times.
The reduction in workforce is part of an ongoing administrative cost-cutting initiative of Humana. The company believes the move will help it create a more efficient, agile infrastructure while providing the resources to invest in new avenues of growth.
Traffic Lifts Darden’s Expectations
Darden Restaurants, Inc. (DRI), one of the world’s largest casual dining restaurant operators, recently lifted its earnings guidance on the heels of improving sales trends and traffic.
The owner of the Red Lobster and Olive Garden chains said that it now expects fiscal year 2010 earnings per share to rise between 5% and 8% from $2.65 delivered in fiscal year 2009. This translates into a profit range of $2.78 to $2.86 per share for fiscal 2010. Currently, the Zacks Consensus Estimate for fiscal 2010 is $2.79. Earlier, Darden expected an earnings growth range of flat to 4%.
Darden expects comparable-restaurant sales to decline 3% in fiscal year 2010, and plans to open 50 to 55 net new restaurants in the year, drastically down from 71 restaurants opened in the last fiscal year. Given the economic conditions, we believe it is wise to take steady steps, rather than getting aggressive.
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