For Immediate Release
Chicago, IL – December 11, 2009 – Zacks Equity Research highlights Gap, Inc. (GPS) as the Bull of the Day and Energizer Holdings (ENR) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Hewlett-Packard (HPQ), 3Com (COMS) and Cisco Systems Inc.(CSCO).
Full analysis of all these stocks is available at http://at.zacks.com/?id=5506
Here is a synopsis of all five stocks:
We maintain Outperform recommendation on Gap, Inc. (GPS) as we anticipate the company to perform well above the market. The Gap is the leading player in the highly fragmented specialty retail sector, and has a market cap more than double its nearest competitor.
The company has improved its business model by realigning its inventory to sales trends. In addition, the company has a strong balance sheet with adequate liquidity and no outstanding debt. The Gap has also been active on the share buyback front and has been paying a steady dividend.
However, consumer discretionary spending would continue to be under severe stress, which limits the upside potential of the company. Our six-month target price is $24 per share.
Energizer Holdings (ENR) fourth-quarter results missed Zacks Consensus Estimates due to lower sales in Household Products and an adverse currency impact. The company expects growth in earnings for fiscal 2010 driven by continued reduction in overhead costs.
The company stands to benefit from restructuring initiatives, product innovations, strong cash flow and increased debt repayment. However, weaker margins, a delay in stock buybacks, intense competition, a sluggish battery business and increased marketing spending are potential negatives.
We downgrade the stock to Underperform as the company has been hit hard by the global economic crisis, leading to weak demand and prices for its battery business. We expect the negative impact of the economic downturn to continue in the near term. Our six-month price target is lowered to $54.00.
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H-P Wins Service Agreement
At a recent press release, Hewlett-Packard (HPQ) declared that it’s Enterprise Services division has signed a three-year agreement to improve the performance and quality levels of key application support services of Optus, an Australia-based telecommunications company.
As per the terms of the agreement, Optus will receive management support for applications relating to certain customer billing, data warehouse and other core systems. The company’s applications performance, quality and service reliability will thus be improved.
Although HP did not mention the monetary value of the contract, we believe that this new agreement strengthens the relationship between the two companies.
This is another service agreement, which is a stable and growing line of business for the company.
A few days back, Hewlett-Packard’s Enterprise Services announced that Ahold, an international group of leading supermarket companies based in the United States and Europe, has signed a seven-year infrastructure and applications services agreement, an expansion of its previous agreement.
Under the agreement, HP was to provide management and support services for Ahold’s global data center environment, which includes mainframes, servers and storage. In addition, HP would deploy HP Business Service Automation service to make Ahold’s server and storage capabilities more robust.
So the company is constantly pushing itself to achieve new heights. The recent acquisition announcement of networking major 3Com (COMS) will enable it to challenge networking leader Cisco Systems Inc.(CSCO), while the new business deals and service agreement will generate additional revenues for the company.
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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