For Immediate Release
Chicago, IL – October 16, 2009 – Zacks Equity Research highlights Semtech Corp. (SMTC) as the Bull of the Day and Washington Federal (WFSL) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Bank of America (BAC), Hasbro (HAS) and Peabody Energy (BTU).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2676
Here is a synopsis of all five stocks:
Semtech Corp. (SMTC) is a fabless supplier of analog and mixed-signal semiconductor devices. Management has been diversifying the product portfolio, introducing new high-margin products and broadening the customer base.
July quarter results exceeded the consensus on both the top and bottom lines. Forward guidance is for 6-10% revenue increase in the October quarter.
Both revenue growth and margin expansion are expected to return in the second half of fiscal 2010 when the new product platforms gain traction. We are reiterating our BUY rating on SMTC shares.
Washington Federal’s (WFSL) third quarter earnings were in line with the Zacks Consensus Estimate. However, the results significantly deteriorated from the prior-year quarter due to a huge increase in provision for loan losses, primarily in response to a deteriorating residential land and construction portfolio.
Credit quality drastically worsened during the quarter. However, declining deposit rates helped improve funding concerns to a great extent and capital position remained strong.
Though margin expansion and increased market share through acquisitions will be a great support going forward, we are concerned about the company’s significant exposure to real estate markets and suspect that it will continue to experience credit quality deterioration. Therefore, we recommend the shares as Underperform.
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Initial Jobless Claims Fall Again
On the continuing claims front, there was also some apparent good news — they fell by 75,000 to 5.992 million, the first time in many months that they have been below the 6 mlllion mark. However, the continuing claims only track regular state benefits, which run ot after 26 weeks. On average, people who are out of work have been looking for a job for over 26 weeks now, a situation that has not been seen since the end of WWII.
After the regular state benefits run out, then emergency Federal benefits kick in (a major element of the stimulus package). There are now more than 3.8 million people getting the extended benefits — up 16,000 from last week (one week behind regular continuing claims, and two weeks behind inital claims). Anyone who claims that the stimulus is not working needs to be able to look at those 3.8 million Americans and their families and tell them that they would be better off if they had no income at all coming in right now — that they are better off doing business at the local food bank rather than at Bank of America (BAC).
Even those extended benefits do not last forever, and people are starting to drop off the roles. Both the Senate and the House have passed measures to extend the benefits for a few more months, especially in high unemployment states, but they are still hammering out the differences in the bills, but it looks like something will be signed soon. Perhaps that will mean that their kids will get things for Chistmas made by Hasbro (HAS) and not Peabody Energy (BTU).
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
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