For Immediate Release
Chicago, IL – May 7, 2010 – Zacks Equity Research highlights Stanley Black & Decker (SWK) as the Bull of the Day and State Street Corp. (STT) the Bear of the Day. In addition, Zacks Equity Research provides analysis on CBS Corporation (CBS), Viacom Inc.(VIA) and Health Net (HNT).
Full analysis of all these stocks is available at http://at.zacks.com/?id=5506
Here is a synopsis of all five stocks:
Stanley Black & Decker (SWK) embarked on a growth strategy of shifting its business portfolio towards favored growth markets through acquisitions like BDK and divestitures, which helps in expanding its global business platform.
However, a huge dependence on the housing industry may have a considerable unfavorable impact on sales, earnings and cash flows. Nevertheless, the diversified customer base, new product launches, innovative techniques and strict cost control are reasons for Stanley to bank on higher revenues.
Thus, we upgrade our recommendation from Neutral to Outperform. We expect the stock to trade at a P/E of 23.5x, to arrive at the target price of $76.00.
Given the critical sustainability factor in the current sluggish economic recovery, we have downgraded our recommendation on State Street Corp. (STT) to Underperform.
Earnings were down compared with the prior-year quarter, due primarily to higher expenses as a result of increased salaries and benefits expenditure. We are concerned about the company’s risky investment portfolio exposure.
The company’s net interest revenue and margin could be negatively impacted by several factors such as the mix of customer liabilities, actions of the various central banks, changes in U.S. and non-U.S. interest rates, the shapes of the various yield curves around the world and the amount of accreted discount from certain investment securities, which were added to State Street’s consolidated balance sheet.
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CBS Earnings In Line with Zacks
CBS Corporation (CBS), a diversified media conglomerate, recently posted first-quarter 2010 results that were in line with the Zacks expectation and portrayed substantial improvement from the year-ago quarter on the heels of a better operating environment and cost-containment efforts, thereby joining the other media companies, which are gradually emerging from the downturn.
The quarter highlights improving trends in the advertising marketplace due to renewed strength in the auto, real estate and financial services categories, rise in traffic at CBS Interactive sites having registered subscriber growth across Cable Networks. Management remains confident about the growth momentum continuing in fiscal 2010.
The New York based company, CBS, indicated that total advertising revenue soared 17% to $2,381.4 million from the prior-year quarter.
Due to its exposure to publishing, radio and television broadcasting, and outdoor billboard businesses, CBS Corporation remains highly susceptible to the advertising market. The company hinted that CBS stations could witness a substantial improvement in political advertising due to the November elections.
Moreover, the retransmission and affiliate fees from CBS’s cable and satellite partners for the right to retransmit broadcast programming have been another source of revenue. CBS is eyeing at least $100 million in retransmission fees in fiscal 2010.
The company’s quarterly earnings of 5 cents a share remain in line with the Zacks Consensus Estimate and showed a drastic improvement over a loss of 5 cents posted in the prior-year quarter. However, on a reported basis, including one-time items, the company delivered a quarterly loss of 4 cents a share, but still managed to be up from a loss of 8 cents posted in the year-ago quarter.
CBS Corporation said that it registered its first double-digit growth in revenue since its separation from Viacom Inc.(VIA) at the end of 2005. Revenue for the quarter under review rose 12% year-over-year to $3,530.9 million.
Adjusted operating income before depreciation and amortization (OIBDA) surged 40% to $351.3 million, whereas the OIBDA margin expanded 200 basis points to 10%.
Health Net Beats, Raises Guidance
Health Net (HNT) reported a 13.1% year-over-year decline in revenues to $3.4 billion. The primary reason for the decline was reduced membership.
The company earns revenues in the form of health plan service premiums, government contracts, northeast administrative services fees, net investment income and administrative services, fees and other income. Health Net continues to serve members of the Northeast business under an agreement with UnitedHealth, the income from which has been shown separately.
Health Net has raised its EPS guidance for 2010. The company has also provided a detailed break-up of its health plan enrollment expectations. While enrollment in the Commercial (down 1%-2%) and Medicare Advantage (down 2%-3%) plans are likely to decline, enrollment in Medicaid (up 5%-6%) and PDP (up 1%-2%) plans are likely to go up. Health Net expects revenues in the range of $13 – $13.5 billion and adjusted EPS in the range of $2.37 – $2.47, up from the earlier guidance of $2.32 – $2.42.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
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