For Immediate Release
Chicago, IL –September 3, 2010 – Zacks Equity Research highlights: Cummins (CMI) as the Bull of the Day and BB&T (BBT) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Cisco Systems (CSCO), Google (GOOG) and eBay (EBAY).
Here is a synopsis of all five stocks:
Cummins (CMI) is set to benefit from fuel economy improvements, new emission standards and increased prices. Liquidity is also improving.
The company reported strong results in the most recent quarter, driven by continued strength in the non-U.S. markets. It also surpassed the Zacks Consensus Estimate by $0.36 during the quarter.
These factors have led us to continue with our Outperform recommendation. Our $89 target price, 17.8X 2010 EPS (trailing 12-month P/E is 18.8), reflects this view.
We are downgrading our recommendation on BB&T (BBT)to Underperform based on concerns related to rising non-interest expenses and deteriorating credit quality.
Second quarter 2010 earnings were in line with the Zacks Consensus Estimate. A higher non-interest expense was among the negatives. Current challenges related to housing market and pressure on the credit quality raise concerns on near-term growth.
Our six-month target price of $21.00 per share equates to about 17.9x our earnings estimate for 2010. Combined with the annual dividend of $0.60 per share, this price target implies an expected negative total return of 7.5% over that period.
Latest Posts on the Zacks Analyst Blog:
Cisco Planning to Acquire Skype
Networking gear maker Cisco Systems (CSCO) has offered $5 billion for the Internet telephony company Skype, TechCrunch, a leading Silicon Valley blog, reported recently. The deal, if successful, would derail a planned initial public offering from Skype and redraw the battle lines in the lucrative market of video communications. Skype is reportedly looking for a valuation of $5 billion.
Google (GOOG) was also rumored to have considered making a bid for Skype, but antitrust concerns prevented the search giant from making an actual offer, the blog reported. Ironically, Google added a free phone-calling service to its Gmail email service last week, a move that was seen as putting the company in direct competition with Skype.
Skype’s attraction lies not only in its video-conferencing capabilities but also its huge worldwide subscriber base. Skype has a registered user base of 560 million, but most of its revenue is generated from nearly 8 million users who pay for its inexpensive computer to landline and mobile phone calling services. Keeping that in mind, it will be interesting to see how Cisco justifies a $5 billion price tag for a company which had revenues of $406 million in the first half of the year and a GAAP profit of $13 million. eBay (EBAY) sold Skype to a group of private investors, led by Silver Lake Partners, for about $1.9 billion.
In June, Cisco had announced that it was working an Android-based tablet computer device Cius aimed at the videoconferencing market. Skype’s expertise in video conferencing will help Cisco augment its IP telephony services that it provides to enterprises.
Indeed, it could be challenging for Cisco to tap Skype’s subscriber base to turn its fortunes around. Skype has eluded profitability in four of the last five years and cash-rich e-Bay, which still retains a considerable stake in the firm, found it difficult to help Skype turn a profit. One way to bring Skype back to profitability would be to make its video-conferencing services chargeable, but that would not come without downsides. However, if Cisco is able to successfully tap Skype’s registered user base, it would emerge as one of the largest Internet calling service companies in the world.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
About the Bull and Bear of the Day
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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BB&T CORP (BBT): Free Stock Analysis Report
CUMMINS INC (CMI): Free Stock Analysis Report
CISCO SYSTEMS (CSCO): Free Stock Analysis Report
EBAY INC (EBAY): Free Stock Analysis Report
GOOGLE INC-CL A (GOOG): Free Stock Analysis Report
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