CHICAGO, Jan. 31, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Google (Nasdaq:GOOG-Free Report), Amazon.com Inc. (Nasdaq:AMZN-Free Report), Netflix (Nasdaq:NFLX-Free Report), Moody's Corporation (NYSE:MCO-Free Report) and City National Corporation (NYSE:CYN-Free Report).
(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Thursday's Analyst Blog:
Google Posts Miss, Shows Wisdom of Sell-off
Following the big news yesterday that Google (Nasdaq:GOOG-Free Report) had jettisoned off the remainder of its Motorola business to Lenovo for $2.9 billion, the first word in Search posted earnings for its fiscal 4th quarter of 2013. The results were less than stellar: EPS of $9.02 (minus stock-based compensation, etc.) missed the Zacks Consensus Estimate of $10.34; revenues of $13.55 billion (ex-traffic acquisition costs, or TAC) were a tad lower than the $13.59 billion we had expected.
Not that this is likely to create a wall of worry in regards to Google's well-being. In fact, the company showed its wisdom by dumping the money-sucking Motorola Mobility business after two straight quarters of big losses for Google: $384 million in the Q4 just reported and $248 million in Q3. In the quarter before that, Google's Motorola business had actually made $1 billion, and many thought Google-made phones were likely to be a mainstay business.
Also, the sell-off for roughly $3 billion will almost be enough to cover the nut for Google's latest acquisition, Nest Labs -- a technology company that runs thermostats, home security and the like. In other words, Google, with its gigantic market cap and revenue stream, is beginning to operate more like a traditional industrial conglomerate -- acquiring this big chunk, selling off that one.
In core Google business, paid clicks were up 31% in Q4, better than analysts had expected. But cost-per-click (CPC) was down 11%, which is worse than predicted. Further, while revenues had ascended over the $14 billion line ex-TAC (reminiscent of those 14K-foot white-caps in the Rocky Mountains -- hmm, could this be the reason the company's located in a place called "Mountain View"?) a few quarters in 2012 and 2013, Google drifted lower in Q4. Probably a good time to make a headline-making change, like they did.
Finally, the long-awaited stock split is now purported to be on April 2, 2014 (pushed back an extra day so they wouldn't schedule it on April Fool's Day -- yoink! [kidding, of course]). This may see an influx of new investors as GOOG shares remain in the general vicinity of all-time highs, even as the stock trades down a hair in the after-market.
Record-Setting Holiday Can't Save Amazon's Earnings
Amazon.com Inc. (Nasdaq:AMZN-Free Report), reported earnings after the bell today. EPS was $0.51, significantly below the Zacks Consensus Estimate of $0.71; while Revenues came in at $25.59 billion, below the Zacks Revenue Estimate of $26.05 billion.
During the day, AMZN's stock rose over 5% on heavy volume in anticipation of a strong earnings announcement. But, both North American sales (accounting for $15.3 billion), and International sales (accounting for $10.2 billion) were down from the previous year. Moreover, the Media division posted decreased revenue both domestically, and internationally.
A strong growth area was Amazon Prime, which boasted over a million new subscribers during the holiday season. Furthermore, it is estimated that the company will add another 5 million new subscribers each year over the next several years. But with the weaker than expected Media numbers, it appears as though the holiday subscribers were only interested in the shipping discount. More importantly, it now seems as though Amazon has lost ground to Netflix (Nasdaq:NFLX-Free Report) in the streaming media category. Finally, management gave revenue guidance between $18.2 billion and $19.9 billion for Q1 2014, which is slightly below previous expectations.
In afterhours trading, Amazon has dropped over 10% on increased volume.
City National Downgraded by Moody's
Concluding the review started in Oct 2013, Moody's Investors Service, the credit rating wing of Moody's Corporation (NYSE:MCO-Free Report), has slashed the long-term ratings of City National Corporation (NYSE:CYN-Free Report) and its operating subsidiary, City National Bank.
The credit rating agency downgraded the long-term senior unsecured and issuer ratings of City National to "A3" from "A2." Concurrently, the bank financial strength rating (BFSR)/baseline credit assessment (BCA) rating and the long-term deposit rating of City National Bank was downgraded to "C+/a2" from "B-/a1" and "A2" from "A1," respectively. All the ratings carried a stable outlook.
The downgrade was led by mounting pressure on the company's profitability due to a low interest rate environment. Being highly reliant on net interest income, lower net interest margin and fee revenue pressures are likely to weigh on City National's pre-tax, pre-provision profits. Also, the company is restricted by its low cost deposit base and low levels of market funding.
As a result, City National has limited ability to counter the revenue pressures. Moody's expects the company to witness more pressure on revenue generation going forward as a result of lower interest income from the divestiture of the FDIC-covered loan portfolio. Expense reduction is not expected to favor up margins.
Moreover, a moderate capital position also accounts for the ratings demotion. Nevertheless, Moody's recognized that the capital position of the company positions it favorably to counter credit losses in an adverse economic condition.
Additionally, Moody's is of the opinion that although the ratings are downgraded, they still remain above the ratings of other U.S. banks owing to balance sheet maintenance, high core deposit funding and above-average asset quality that is driven by its residential mortgage and home equity portfolio (representing one-third of the total loans).
Nevertheless, ratings downgrade from credit rating agencies dampens the creditworthiness of a company in the market and affects investor confidence in the stock.
City national currently carries a Zacks Rank #3 (Hold).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today.
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.
Get the full Report on GOOG - FREE
Get the full Report on AMZN - FREE
Get the full Report on NFLX - FREE
Get the full Report on MCO - FREE
Get the full Report on CYN - FREE
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
SOURCE Zacks Investment Research, Inc.
WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?
Newsrooms &
Influencers
Digital Media
Outlets
Journalists
Opted In
Share this article