For Immediate Release
Chicago, IL – March 23, 2010 – Zacks Equity Research highlights Hibbett Sports (HIBB) as the Bull of the Day and Total System Services (TSS) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Polycom Inc. (PLCM), Hewlett-Packard Co. (HPQ) and Cisco System 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 our Outperform recommendation on Hibbett Sports (HIBB) as we anticipate it to perform well above the market. Its sharp focus towards mid-sized and smaller markets and a strategic mix of branded as well as localized merchandise provide an edge over its rivals in a highly competitive specialty retail industry.
Hibbett’s management is also committed towards expanding its store network in fiscal 2011. Moreover, the company’s debt-free balance sheet and full availability under credit facilities bode well for future operating performance.
While macroeconomic headwinds may continue to affect the U.S. discretionary spending environment and limit the above-market performance of the company, our long-term Outperform recommendation on the stock indicates that it would perform well above the market. Our target price of $30.00, 23.3X 2011 EPS, reflects this view.
We are initiating coverage on Total System Services (TSS) with an Underperform recommendation. The company’s fourth quarter earnings came in a penny ahead of the Zacks Consensus Estimate. However, results posed weak top-line growth due to sluggish performance in the electronic payment processing services.
Inefficient cost-cutting and negative growth guidance for 2010 were also among the negatives. Although management expects to grow inorganically with a modest cash position and a risk-free balance sheet, the company is adequately exposed to competition, currency fluctuation and interest risk.
Moreover, poor credit markets and weakness in the credit card industry has led to a decline in the number of client accounts and long-term contracts. Hence, we do not foresee any substantial development strategy to drive earnings growth in the near term.
Latest Posts on the Zacks Analyst Blog:
Polycom Gets HP from Tandbarg
In Its efforts to counter the competitive threat from rival Tandbarg, Polycom Inc. (PLCM) scores a major gain. Hewlett-Packard Co. (HPQ) recently terminated its existing contract with Tandbarg ASA and entered into a strategic agreement with Polycom to sell the latter’s video conferencing products. According to Gartner Inc, the video conferencing market will grow at a CAGR (compound annual growth rate) of 17.8% between 2008 and 2013, rising from $3.8 billion to reach $8.6 billion.
During the last couple of quarters, Polycom is trying hard to expand its business relationship with several original equipment manufacturers and resellers after Cisco System Inc. (CSCO) decided to acquire Tandbard for a consideration of $3.41 billion. The deal is currently awaiting regulatory approval. A unified Cisco-Tandbarg is likely to significantly reduce Polycom’s market share.
The new agreement with Polycom and Hewlett-Packard will be mutually beneficial to both the companies. Hewlett-Packard which currently sells high-end telepresence services can now enter into the much broader video conferencing market. On the other hand, Polycom will further solidify its already strong list of strategic partners and reseller agreement with a company like Hewlett-Packard and help the company gain market share. Management expects to recognize revenue from this deal from the second half of 2010.
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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