For Immediate Release
Chicago, IL – January 22, 2010 – Zacks Equity Research highlights Arrow Electronics, Inc. (ARW) as the Bull of the Day and GlaxoSmithKline (GSK) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Goldman Sachs (GS), JPMorgan (JPM) and Bank of America (BAC).
Full analysis of all these stocks is available at http://at.zacks.com/?id=5506
Here is a synopsis of all five stocks:
Arrow Electronics, Inc. (ARW) recently upgraded its outlook for the fourth quarter of 2009. The company now expects revenues to come between $3.8 billion and $4.2 billion in the December quarter, up from the previous guidance of $3.65 billion to $4.25 billion.
Management stated that the upgrade in guidance was driven by stronger than expected growth in the components business. However, sales in the last few weeks of December will determine sales of the computing solutions business. Earnings per share (EPS) are now projected between $0.57 and $0.63, up from the earlier estimate of $0.44 $0.56.
We expect overall demand to improve going forward with the economy showing signs of recovery. We upgrade our rating to OUTPERFORM from NEUTRAL.
GlaxoSmithKline (GSK) reported third quarter income of $0.92 per American Depository Share (ADS), 3 cents below the Zacks Consensus Estimate. The company reported earnings of $0.94 in the year-ago period. Third quarter revenue increased 3%.
While the company’s diversified base and presence in different geographical areas should help support revenues, we remain concerned about future growth prospects given the patent challenges being faced by several of Glaxo’s products. With several products expected to lose exclusivity and the swine flu opportunity likely to miss expectations, we expect the company’s topline to remain under pressure in the coming quarters.
Glaxo’s pipeline needs to deliver in order to make up for lost revenues and any development or regulatory setbacks would be a major disappointment for the company. We are downgrading the stock to Underperform with a target price of $37.
Latest Posts on the Zacks Analyst Blog:
Obama Gets Tough on Wall Street
President Obama: …I’m proposing a simple and common-sense reform, which we’re calling the “Volcker Rule” …. Banks will no longer be allowed to own, invest, or sponsor hedge funds, private equity funds, or proprietary trading operations for their own profit, unrelated to serving their customers. If financial firms want to trade for profit, that’s something they’re free to do. Indeed, doing so –- responsibly –- is a good thing for the markets and the economy. But these firms should not be allowed to run these hedge funds and private equities funds while running a bank backed by the American people.
This brings back the spirit of Glass-Stiegel. Essentially saying the bank cannot take insured deposits and run off to Vegas to try their luck. Risk-taking is vital to the economy, but it should not be done by insured banks.
Ideally we would go back to the days of 3-6-3 banking, where bankers borrow at 3% from depositors, lend it out at 6% on safe, well-collateralized loans, and can make it to the first tee by 3pm. The big-risk taking should be in separate financial institutions.
I suspect that if this proposal goes through, banks will have to make a choice, or possibly split themselves up. Firms like Goldman Sachs (GS) — which only became a bank holding company last year during the crisis — will go back to being investment banks, free to essentially be hedge funds. Others will decide to become safe stable commercial banks, ones with less risk, but also less profitable, and which would probably deliver utility-like returns.
The Goldmans of the world could earn very high returns, but if they messed up, their shareholders and even their unsecured creditors would take a big hit. Firms like JPMorgan (JPM) and Bank of America (BAC) would probably spin off their investment banks to shareholders as separate firms (basically undoing the acquisitions of Bear Stearns and Merrill Lynch).
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
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Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
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