For Immediate Release
Chicago, IL – April 30, 2010 – Zacks Equity Research highlights POSCO (PKX) as the Bull of the Day and State Street Corp. (STT) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Hewlett-Packard Company (HPQ), Palm Inc.(PALM) and Dell Inc. (DELL).
Full analysis of all these stocks is available at http://at.zacks.com/?id=5506
Here is a synopsis of all five stocks:
POSCO (PKX) is the largest steel producer in Korea. The company’s product line includes hot-rolled and cold-rolled products, plates, wire rods, silicon steel sheets and stainless steel products.
POSCO’s expansion into fast-growing markets and wide regional diversification should pull it through difficult situations in the future. However, competition from global steel manufacturers with expanded production capacity could result in significant price competition, declining margins and reductions in revenue.
Nevertheless, a slight improvement in the global steel market has pushed revenues in the positive direction, which is going to continue in the coming years. Thus, we upgrade our recommendation on the ADR from Neutral to Outperform.
Given the critical sustainability factor in the current sluggish economic recovery, we are downgrading our recommendation on State Street Corp. (STT) to Underperform. The company’s first-quarter earnings were in line with the Zacks Consensus Estimate.
Results for the quarter were aided mainly by an increase in revenue and growth in assets under management. However, earnings were down compared with the prior-year quarter, due primarily to higher expenses as a result of increased salaries and benefits expenditure.
Our six-month target price of $40.00 per share equates to about 12.0X our earnings estimate for 2010. Combined with a quarterly dividend of $0.01 per share, this target price implies an expected negative total return of 10.0% over that period, which is consistent with our Underperform recommendation.
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HP’S Smart(phone) Move
The world’s largest computer maker Hewlett-Packard Company (HPQ) disclosed on Wednesday that it would be taking over the ailing smartphone company Palm Inc.(PALM) for $1.2 billion. This represents a whopping 53.6% premium to its market capitalization at the end of the day.
The acquisition is expected to provide HP a foothold in the smartphone market, strengthening its competitive position versus Dell Inc. (DELL), which recently entered the market with its proprietary smartphone. HP’s interest in the company could also have something to do with Palm’s indigenous software that can run not only mobile phones but also other types of mobile computing devices. Historically, HP has always benefited from adopting technologies from acquired companies.
The takeover is a windfall for Palm shareholders, since we believe it would be difficult for any company to match HP’s offer. Additionally, the head of HP’s personal systems group, Todd Bradley, stated that HP would spend heavily on research & development and marketing for Palm products in order to help increase sales volumes of Palm’s Pre and Pixi smartphones.
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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