For Immediate Release
Chicago, IL – November 28, 2012 – Zacks Equity Research highlights Royal Caribbean (RCL) as the Bull of the Day and Microchip Technology (MCHP) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Visa Inc. (V), MasterCard Inc. (MA) and American Express Co. (AXP).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Royal Caribbean (RCL) is recovering at a steady pace from its close competitor Carnival's ship grounding in January this year and consequent dip in passenger confidence. Although the economic turmoil in Europe continues to nag the company, the extreme upheaval seems to have dispersed. The company's increased earnings guidance and third-quarter top- and bottom-line consensus beat are indicative of this fact.
The company also experienced a slight increase in on-board revenue in the third quarter and its cost containment efforts are also paying off. Relatively stabilized booking patterns, cost containment efforts, fuel conservation initiatives, increasing exposure to countries like China in order to tap the developing cruise travel market and the slowdown in industry capacity are positives for the shares.
Hence, we upgrade the recommendation from Neutral to Outperform. Our six-month target price of $40.00 per share equates to about 20.4x our estimate for 2012. The target price implies an expected return of 19.3% over that period.
Microchip Technology (MCHP) is one of the fastest growing providers of 16-bit and 32-bit microcontrollers. Earnings estimates have gone down significantly after the company reported its second quarter 2013 results, which missed the Zacks Consensus Estimate for the second quarter in a row.
Sales continued to decline due to weak European markets and uncertain economic environments in the U.S. and China. Margins were hit by increased acquisition charges. The guidance provided by the company was also weak. The uncertain economic environment, coupled with deceleration in worldwide GDP growth, continues to hamper Microchip.
Therefore, a significant improvement in business is not in the cards for the near term. Consequently, we have downgraded our recommendation on the company to Underperform from Neutral.
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Visa Secures eCommerce
Visa Inc. (V) announced the launch of a new service – Visa Consumer Authentication Service – to mitigate the risk of fraud related to the eCommerce transactions in Canada.
Accordingly, the new authentication service will dynamically support a secure payment process through a new feature – Three Domain (3-D) Secure program. This new 3-D feature will enhance the level of security Visa takes while the consumer makes its payment and checks out of the terminal.
Presently, the new service does not require customers to go through the hassle of entering passwords for verification. The 3-D feature automatically assesses the authenticity of a particular transaction by the historical trend of the consumer’s expenditure. It also detects the device from which the transaction is made and relays all information regarding it, thereby making the service useful for mobile payments.
Authenticated payment services are a critical requirement at this moment since the card industry solely operates on chip cards that hold all the customer information. These cards interchange various hands, such as retailer, merchant and acquirer, before reaching the ultimate source.
Visa has been consistently aiming to achieve high data security in order to maintain a strict security protocol, thereby adding an easy and reliant defense mechanism in to the payment system. This also ensures the long-term growth opportunity for eCommerce. To deliver a higher level of card data security to acquirers and merchants, the company unveiled an upgraded data security service – Visa Merchant Data Secure – in August this year.
The company aims to retain its strength by exploring newer growth avenues, besides expanding into emerging international markets to support growth. Moreover, the regulatory challenges have diverted Visa’s synergies to the rapidly growing prepaid cards, money transfer services, eCommerce and mobile banking in order to reach out even to the small businesses, thereby helping them to increase profitability and cash flow by initiating controlled spending with convenience. Hence, to meet these growth strategies, Visa needed a critical data safety and control system in order.
Overall, Visa is making vigorous attempts to augment its core processing capabilities and maintain its competitive position, primarily against its arch rivals – MasterCard Inc. (MA) and American Express Co. (AXP) – in an increasingly complex payments environment, primarily through the strategic technology acquisitions and product innovations.
Visa currently retains a Zacks #2 Rank, which translates into a short-term Buy rating, while the long-term recommendation remains Neutral.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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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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