CHICAGO , June 11, 2012 /PRNewswire/ -- Zacks Equity Research highlights The Valspar Corporation (NYSE: VAL ) as the Bull of the Day and Health Net, Inc. (NYSE: HNT ) as the Bear of the Day. In addition, Zacks Equity Researchprovides analysis on Facebook Inc. (Nasdaq: FB ), Apple (Nasdaq: AAPL ) and Google (Nasdaq: GOOG ). (Logo: photos.prnewswire.com/prnh/20101027/ZIRLOGO ) Full analysis of all these stocks is available at at.zacks.com/?id=2678. |
Here is a synopsis of all five stocks: Bull of the Day : We are maintaining our Outperform recommendation on The Valspar Corporation (NYSE: VAL ). Second quarter earnings topped the Zacks Consensus Estimatewhile sales missed. The company witnessed improved margins in thequarter, supported by pricing, better productivity and synergiesfrom restructuring. Valspar raised its earnings forecast for 2012based on volume gains and effective cost management. The company expects sales to benefit from the diverse mix ofbusinesses and growth in the fast growing coatings markets across Asia and Latin America.
We believe the company has a strong pipeline of new products andsignificant opportunities for share gains in both its Paint andCoatings segments globally. Moreover, Valspar is expected to benefit from its restructuringactions while maintaining its operational and pricing discipline.Our price target of $56 is based on 17.1x our fiscal 2012 earnings estimate, within thecompany's historical range. Bear of the Day : We are downgrading our recommendation on Health Net, Inc. (NYSE: HNT ) to Underperform from Neutral on the back of disappointingfirst-quarter results.
Health Net's financial leverage deterioratedwith higher debt-to-total capital ratio and lower shareholdersequity. Health Net's first-quarter 2012 earnings lagged the Zacks ConsensusEstimate due to a substantial decline in revenue. This primarilyresulted from lower revenues in the Government Contracts segmentdue to the new T-3 TRICARE North contract, which restricted theearnings that could be recognized. Our six-month target price of $23.00 per share equates to about 10.1x our earnings estimate for 2012.With no dividend to supplement, this target price implies anexpected negative return of 10.4% over that period, which isconsistent with our Underperform recommendation on the shares. Latest Posts on the Zacks Analyst Blog : In a move to woo mobile users, Facebook Inc.
(Nasdaq: FB ) recently released its centralized "App Center" that consists ofmore than 600 applications including Nike+ GPS, Ubisoft Ghost ReconCommander, Stitcher Radio, Draw Something and Pinterest. The App Center is available on the Internet as well as on Apple's (Nasdaq: AAPL ) iOS and Google's (Nasdaq: GOOG ) Android-based mobile devices. Mobile revenue growth had been abit of concern for Facebook lately and its initial public offering(IPO) also suffered due to the lack of visibility aroundmonetization of mobile platforms. Although Facebook reported 488 million monthly average users (MAU)for its mobile products as of March 31 , the company expressed doubts in its S1 filing prior to the IPO,regarding the success of its monetization efforts in the mobilesegment. This is primarily due to the fact that historically Facebook hasbeen totally focused on the desktop segment.
Hence its applicationswere cumbersome for mobile users and the small windows of mobilephones. Mobile is a different ballgame altogether. Unlike personalcomputers, mobile users navigate much faster over their devices andapplications as they are mainly done on the move. Hence, mobileapplications need to be smart, simple and fast. Due to this reason, Facebook never really had any ad coverage onmobile platforms, as Ads along with mobile applications need to bemuch catchier and less time-consuming than the ads aimed atdesktops.
In March this year, Facebook included sponsored storiesin users' mobile for the first time in its history. We believe that the roll-out of the centralized applicationdatabase will attract more mobile users to Facebook. As the AppCenter recommends applications based on users' personal choice andtheir friends choice, mobile users will find it easy to navigateand search through the database to access their apps within a shortspan of time. Moreover, the new App Center connects users with Apple's andGoogle's respective application stores, from which users can simplydownload apps on their mobiles.
The App Center also carries a new"send to mobile" feature; through which desktop users can downloadmobile apps. Although we expect that the new App Center will boost Facebook'smobile customer base, it is likely to lose some non-advertisingrevenues (transaction fees charged by third party providers) byforwarding users to stores of Apple and Google, Therefore, theeffectiveness of the App Center in terms of generating significantadvertising revenue from mobile platforms is something to beproved, in our view. Nevertheless, we believe that Facebook is well positioned to growover the long term based on its large customer base and provenbusiness model. The company enjoys a first mover advantage in thesocial networking market.
Although advertising revenue has somewhatslowed down in recent months, we note that non-advertising revenuesincreased five fold in 2011. This is the revenue Facebook earns from third party developers andthrough the sale of Facebook Credits (a form of virtual currency).As more and more third party developers flock to Facebook, webelieve that non-advertising revenue will increase going forward. However, increasing competition from established players such asGoogle as well as new entrants and uncertainty in the mobilesegment can limit upside going forward. Currently, Facebook has aZacks #3 Rank, which implies a Neutral rating over the short term(1-3 months).
Get the full analysis of all these stocks by going to at.zacks.com/?id=2649 . About the Bull and Bear of the Day Every day, the analysts at Zacks Equity Research select two stocksthat are likely to outperform (Bull) or underperform (Bear) themarkets over the next 3-6 months. About the Analyst Blog Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest newsand events impacting stocks and the financial markets. About Zacks Equity Research Zacks Equity Research provides the best of quantitative andqualitative analysis to help investors know what stocks to buy andwhich to sell for the long-term.
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