For Immediate Release
Chicago, IL – May 12, 2010 – Zacks Equity Research highlights Chipotle Mexican Grill (CMG) as the Bull of the Day and Myriad Genetics Inc. (MYGN) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Apple (AAPL), China Mobile (CHL) and Priceline.com (PCLN).
Full analysis of all these stocks is available at http://at.zacks.com/?id=5506
Here is a synopsis of all five stocks:
Chipotle Mexican Grill (CMG) has remained largely unruffled by the recent economic slowdown. The company is well-positioned to expand rapidly while generating improved earnings, margins and returns on invested capital.
With a strong balance sheet, consistent earnings and healthy cash flow, we think the stock provides relative safety and consistent growth. The company’s results have been stable relative to many of its peers with comparable-store sales that appear to have held up over time.
Moreover, the company’s “Food With Integrity” program provides a significant competitive advantage in the fast-casual segment. As such, we have an Outperform recommendation on the stock.
Myriad Genetics Inc.’s (MYGN) third quarter fiscal 2010 earnings of $0.33 per share fell short of the Zacks Consensus Estimate by $0.05. The company had earned $0.38 per share in the year-ago period.
Myriad Genetics spun off its therapeutics business in July 2009 to focus on molecular diagnostics going forward. Although the molecular diagnostics business is performing well, we remain concerned about the overall weakness in the economy. It has affected sales adversely in the recent quarters.
Competition confronting Myriad Genetics’ products in the biotechnology and genetics testing field is also a concern. Consequently, we downgrade the stock to Underperform.
Latest Posts on the Zacks Analyst Blog:
Still Lack of Hiring, Not More Firing
This suggests to me that the Stimulus Program has been far more successful in the saving than creating part of its goal of saving or creating four million jobs. The money that went to the states to help shore up education budgets (almost $100 billion of the $787 billion total) is a good example of this.
It is not that the school districts went out and hired a lot of new teachers and guidance counselors, it simply prevented them from being laid off. Given the absolute collapse in tax receipts at the state and local level (mostly dependent on sales and property taxes), those lay-offs would have occurred. They are probably still coming since those monies have largely been spent, and there is no appetite right now to renew them. In the current climate, local levies for school districts are not doing well, even if they are replacement levies.
It is sort of ironic that the main argument for cutting spending now is that we will leave our children a bleak, debt-laden future if we don’t reduce the deficit. While that might be true, just how bright a future do you think our children will have if they are all illiterate and innumerate?
Supposedly, we have to keep taxes on capital gains and dividends low since raising them will hurt economic growth. Just how much economic growth do you think this country will have without an educated workforce? Will Apple (AAPL) still be able to design innovative products that the world wants to buy if it can’t find engineers who understand math? Or will Apple have to import all that talent from India and China? If so, why do it here rather than in India and China?
As it is, those places are producing far more engineering graduates than we are each year, and their best schools easily rival our best, and our best are in large part filled with students from India and China, in any case.
I would submit that raising taxes on capital gains to ordinary income levels would be a far less damaging way to close the budget deficit than slashing spending on education. That is particularly true for relatively short-term capital gains on mature, well-established companies.
Long-term (say five years) capital gains on start-up firms might be a different story. Those could also be targeted better to investments made inside the U.S. As it stands now, if I buy 100 shares of China Mobile (CHL) today and sell it a year from now at a 20% profit, that income is taxes at the same 15% rate that I would earn if I invested in a small start up here in this country that produced jobs here.
While I like CHL as a large dividend-paying company at a very reasonable valuation, it is a play on growth in China, not America. How that investment has helped U.S. economic growth and should thus be favored over what I earn in my paycheck is a bit of a mystery to me. How that low rate helps our future as a country relative to laying off teachers is an even bigger mystery.
Priceline Numbers Disappoint
Priceline.com’s (PCLN) first quarter earnings missed the Zacks Consensus by 23 cents. Revenue was also slightly short, missing by 1.0%. Shares slid 12.11% after hours, as the big miss took investors by surprise. We believe that the uncertainty regarding near-term performance was also responsible for the negative sentiment, since second-quarter guidance was quite good.
The earnings miss was the result of the volcano in Iceland, which led to a large number of cancellations and postponements. Civil unrest in Thailand was also a concern in the last quarter.
Revenue of $584.4 million was up 7.9% sequentially, up 26.5% from the year-ago quarter and at the high end of management’s guided range of a 23-27% year-over-year increase.
Although revenue continues to grow at double-digit rates from the year-ago quarter, the rate of increase is declining. Management expects this trend to continue, as the company enjoyed relatively better comps over the past few quarters, due to the recession impacting the year-ago quarters. So as the year progresses, comps are expected to become more difficult.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
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