Zacks Bull and Bear of the Day Highlights: Cyberonics, NYSE Euronext, T. Rowe Price Group, Franklin Resources and City National
CHICAGO, Dec. 10, 2012 /PRNewswire/ -- Zacks Equity Research highlights Cyberonics Inc. (Nasdaq: CYBX) as the Bull of the Day and NYSE Euronext (NYSE: NYX) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on T. Rowe Price Group Inc. (Nasdaq: TROW), Franklin Resources Inc. (NYSE: BEN) and City National Corporation (NYSE: CYN).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Cyberonics Inc. (Nasdaq: CYBX) reported a 37.5% year over year growth in adjusted EPS of 0.44 in the second quarter 2013, surpassing the Zacks Consensus Estimate of $0.39. Revenues increased 17% to $63.0 million, beating the Zacks Consensus Estimate of $60 million.
The EPS upside was on the back of huge operating margin expansion coupled with 33% reduction in interest expenses. Moreover, robust demand for the redesigned AspireHC generator led to improvement in epilepsy revenues. Meanwhile, in order to expand its international base, Cyberonics is strengthening its pipeline as well as investing in sales and marketing especially in Europe and Japan.
Based on its strong growth potential, the company has increased fiscal 2013 guidance. Accordingly, we maintain Outperform rating on the stock.
NYSE Euronext's (NYSE: NYX) third quarter earnings plunged year over year based on weak volumes and pricing across trading venues, which led to a reduced top line and lower operating margin. However, while low cash position and high debt raised the concerns of rating agencies, capital deployment remained intact.
The launch of NYPC platform, new data centers and IRS derivatives on U.S. Liffe boost long-term revenue opportunities. NYSE aims to further augment long-term growth strategies by developing a clearing house in Europe, enhancing technology and risk-management services and global expansion, among others. But these initiatives carry an initial cost and regulation burden.
Our six-month target price of $22.00 equates to about 11.7x our earnings estimate for 2012. With an annual dividend of $1.20, this price target implies a negative total return of 6.9% over that period. This is consistent with our long-term Underperform recommendation on the shares.
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T. Rowe Price Offers Special Dividend
The shareholders ofT. Rowe Price Group Inc. (Nasdaq: TROW) now have a reason to applaud. The company has recently declared a special cash dividend of $1.00 per share, which will be paid on December 28, 2012 to stockholders of record as of December 17.
With this special dividend, T. Rowe Price joins the bandwagon of companies declaring special dividends in the recent past. This comes as a result of probable increase in tax on dividends next year.
T. Rowe Price is committed to return value to shareholders with its strong cash generation capabilities. Following this special cash dividend, the company will continue to maintain a solid balance sheet with no corporate debt as well as cash and mutual fund investment holdings of around $2 billion.
As a matter of fact, in February 2012, T. Rowe Price's Board of Directors approved a 10.0% hike in its quarterly common stock dividend. The revised quarterly dividend now stands at 34 cents per share compared with the previous amount of 31 cents per share. This marked T. Rowe's 26th consecutive annual dividend increase.
Baltimore-based global investment management organization, T. Rowe Price had $574.4 billion in assets under management (AUM) as of September 30, 2012. We believe that the company has the potential to take advantage of the economic recovery and benefit from the growth opportunities in the domestic and global AUM. Yet, competitive pressures amid economic headwinds remain the major causes of concern.
Recently, Franklin Resources Inc. (NYSE: BEN) announced a special cash dividend of $3.00 per share for its shareholders. This dividend will be paid on December 20, 2012 to shareholders of record as of December 6.
Among others, California-based City National Corporation (NYSE: CYN) announced a special cash dividend of 25 cents per share, which will be paid on December 18, 2012 to stockholders of record as on December 3.
T. Rowe Price currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. We believe the announcement of special dividend will be an appropriate step for the company to enhance shareholders' confidence, which might lead to positive estimate revisions in the near term. This, in turn, could cause an improvement in the Zacks Rank.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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