For Immediate Release
Chicago, IL – December 4, 2009 – Zacks Equity Research highlights Hibbett Sports (HIBB) as the Bull of the Day and Smith International (SII) the Bear of the Day. In addition, Zacks Equity Research provides analysis on CVS Caremark Corp.(CVS), Energizer Holdings Inc.(ENR) and Procter & Gamble (PG).
Full analysis of all these stocks is available at http://at.zacks.com/?id=5506
Here is a synopsis of all five stocks:
We are changing our recommendation on Hibbett Sports (HIBB) from Neutral to Outperform as we anticipate it to perform well above the market. Hibbett’s sharp focus towards midsized and smaller markets and strategic mix of branded as well as localized merchandise provide an edge over rivals in a highly competitive specialty retail industry.
Hibbett’s management is also committed towards expanding the store network and keeping a strict control over expenses, which drove performance during the third quarter of fiscal 2010. Moreover, the company’s debt-free balance sheet and full availability under credit facilities bode well for future operating performance.
However, macroeconomic headwinds may continue to affect the U.S. discretionary spending environment and limit the above-market performance of the company.
Smith International (SII) reported weaker-than-expected third quarter results, weighed down by a challenging North American natural gas market that contributed to continued pricing pressure within the domestic operations of the Distribution and Oilfield segments.
We believe that Smith will continue to struggle to leverage its international expansion to cross-sell its acquired W-H Energy product lines (mostly unconventional gas drilling). The W-H Energy acquisition has exhibited a materially different strategic outlook that has burdened returns in the interim for the prospects of growth.
Additionally, we expect margins to remain under pressure in the coming quarters, given an eroding pricing power. Our six-month target price is $23 per share.
Latest Posts on the Zacks Analyst Blog:
Energizer in Trouble?
According a recent news report, CVS Caremark Corp.(CVS) said that it will stop selling Energizer Holdings Inc.(ENR) alkaline batteries at its stores from 2010. The report also said that CVS will sell Procter & Gamble’s (PG) Duracell alkaline batteries instead. However, the company will continue sell Energizer’s lithium batteries in all of its stores until the end of this year.
The consumer products industry is highly competitive with Procter & Gamble as a formidable competitor in the battery (Duracell), blade (Gillette) and feminine products categories. Energizer batteries lag behind Duracell batteries in market share in the U.S. — 41.6%, followed by Energizer’s 27.8%. This is according to Information Resources Inc., a Chicago-based market research firm.
Energizer’s competitors have significantly larger financial resources. We expect mass retailers to pressure prices, both through negotiations and shift to larger pack sizes, which carry lower margins.
Therefore, Energizer Holdings must constantly develop, introduce and promote new products. As a result, advertising and marketing expenditures have almost doubled in 2008, which may pressure margins.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
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