For Immediate Release
Chicago, IL – January 3, 2013 – Zacks Equity Research highlights Equifax (EFX) as the Bull of the Day and Diamond Foods (DMND) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Hewlett-Packard Co. (HPQ), IBM (IBM) and Dell Inc. (DELL).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Equifax (EFX) delivered decent third quarter 2012 results, surpassing the Zacks Consensus Estimate on the top and bottom lines. Fourth-quarter guidance was encouraging.
We believe that Equifax is well positioned to benefit from its leadership in important markets and strength in international markets. Given its strong correlation to consumer and financial markets, as well as its U.S. exposure, improvement in results will be directly proportional to the country's economic recovery.
Moreover, stronger mortgage activities are expected to boost Equifax fundamentals. We upgrade the stock from Neutral to Outperform and set a target price of $64.00.
We have downgraded our long-term recommendation on Diamond Foods (DMND) to Underperform following its dismal first quarter fiscal 2013 results. Its adjusted earnings of $0.23 per share plunged 67.6% from the year-ago quarter, primarily due to weak top-line performance and increased operating expenses as a percentage of sales.
Total sales dipped 10.1% year over year to $258.5 million, and missed the Zacks Consensus Estimate of $274.0 million. The company's performance may also get a hit due to difficulty on its part to secure walnut supplies and repair its ties with growers.
Otherwise, a highly leveraged balance sheet may stop it from taking strategic initiatives. Further, continued macroeconomic headwinds, intense competition, product recalls and fluctuations in raw material prices may undermine the company's future growth prospects and sustainability.
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Finally Some Good News for H-P
Despite the tumultuous situation surrounding the autonomy issue, PC giant Hewlett-Packard Co. (HPQ) ended the year on a positive note. The company (aka H-P) retained a federal contract worth $543.0 million despite IBM’s (IBM) protest. The contract was held back for evaluation issues, reports Bloomberg.
Back in June, a contract was announced by the Department of Veterans Affairs (:VA). The 5-year wireless tracking contract required the 90 competing companies to provide a technology to reduce the number of lost equipment, monitor sterilization of medical devices and identify patients receiving recalled products.
H-P was initially awarded the contract. In response, IBM challenged the agency’s decision and its evaluation process before the U.S. Government Accountability Office (:GAO), the agency to resolve contract disputes.
The GAO held the Department of VA guilty of not evaluating the proposal properly and ordered a re-run of the selection process.
The re-evaluation process turned out to be positive for H-P as the agency found H-P’s technological support to be the most competent.
A win against IBM and the federal agency’s continued reliance on its services is certainly a reason to cheer for H-P. But the pending decision regarding the authenticity of accounting irregularities in Autonomy’s financials (before the acquisition deal) and declining revenue trend (owing to soft PC market and strained IT spending) is keeping the tech giant under pressure.
Currently, H-P has a Zacks #3 Rank (Hold). Its archrivals Dell Inc. (DELL) and IBM also have a Zacks #3 Rank (Hold).
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
About the Bull and Bear of the Day
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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