Envision Healthcare Holdings, Oil StatesInternational, GrubHub, Citigroupand Morgan Stanley highlighted as Zacks Bull and Bear of the Day
CHICAGO, April 8, 2014 /PRNewswire/ -- Zacks Equity Research highlights Envision Healthcare Holdings (NYSE:EVHC-Free Report) as the Bull of the Day and Oil States International (NYSE:OIS-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onGrubHub Inc. (NYSE:GRUB-Free Report), Citigroup (NYSE:C-Free Report) and Morgan Stanley (NYSE:MS-Free Report).
Here is a synopsis of all five stocks:
Before the S&P 500 and Russell 2000 caught a bid late in today's trading session, I was looking for a Midcap growth stock that had outperformed the broad indices on this recent sell off. It would be even better if I could find a company that fit this description that also popped up on the momentum stock screener I use to uncover potential winners in the market. Plus if I could find a chart that was on the bullish side of things, I figured I could carve something good out of this market malaise.
My screen is relatively simple. I look for stocks that have had a good earnings surprise recently, are within earshot of their 52 week highs, and are Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy) stocks. This way I have a solid earnings story with some strength in the stock price. Then I can go one by one and find stocks that I think have better charts than the rest of them.
Using this process, today's Bull of the Day is Envision Healthcare Holdings (NYSE:EVHC-Free Report). Envision is a Zacks Rank #1 (Strong Buy) in the Medical Services industry that ranks in the top 11% of our Zacks Industry Rank. Envision is one of the leading providers of outsourced emergency department and ambulance services. Rather than relying on organic growth alone, EVHC is aggressive in its acquisition of other ambulance companies and looks for M&A activities that are immediately accretive to their bottom line.
As a result we have seen earnings estimates ratchet up for the current year and next year. Current year consensus has risen from 84 cents to $1.10 per share after seven analysts have revised earnings to the upside. Next year's numbers have been revised up from $1.12 to $1.42 by five analysts. In addition to the revisions, earnings surprises over the last two quarters have all helped boost EVHC to our highest rank.
Start with an industry in the bottom 18% of our Zacks Industry Rank, add 5 downward earnings revisions, sprinkle in a few earnings misses and you have our Bear of the Day, Oil States International (NYSE:OIS-Free Report). Consensus for the current year has dropped from $6.64 to $5.77 per share and next year's estimates saw a decline from $7.49 to $6.77.
Oil States International is a diversified oilfield services company. They are the leading manufacturer of products for deepwater production facilities and subsea pipelines. OIS is a Zacks Rank #5 (Strong Sell) in the beat down Oil Field Machinery and Equipment industry. Downward revisions have the stock wallowing at the bottom of our ranking. The story wasn't always like this. From 2009 to late 2012, OIS consistently saw earnings growth and earnings estimates revisions to the upside. These events helped OIS rise from a $20 stock to over $100 at its most recent high. A quick look at the price and consensus shows the change in the story recently that occurred. We go from having a consistent up and to the right chart pattern to seeing the dreaded down and to the right lines in the consensus. This could provide further downside pressure for the stock.
Additional content:
GrubHub Makes Strong Debut
Initial Public Offerings (IPO) continues to enjoy the favors of the market. The latest one being GrubHub Inc. (NYSE:GRUB-Free Report), whose shares surged 30.8% ($8.00) to close at $34.00 on Apr 4, 2014. The online food-delivery service raised $192.4 million on IPO, much higher than its initial expectations.
The sharp jump in GrubHub shares reflects growing appetite of investors for IPOs, particularly in technology and Internet-related sector. Exceptforthe developer of Candy Crush Saga (which dropped 16.0% in its first trading day) most of the IPOs from the sector were successful to date in 2014.
GrubHub initially offered 7.0 million shares with a price range of $20.00 to $22.00 per share. However, the strong IPO market pushed the company to raise the price range to $23.00 to $25.00. GrubHub finally sold 7.4 million shares for $26.00. Citigroup (NYSE:C-Free Report) and Morgan Stanley (NYSE:MS-Free Report) were the lead underwriters.
GrubHub has approximately 28,800 restaurant partners across 600 cities, which pay a fee when users place food orders. The company noted that approximately 43.0% of orders came through mobile devices in 2013. As of Dec 31, 2013, GrubHub had 3.4 million active diners.
Per S-1 filings, GrubHub processed 135K revenue generating orders per day, while gross food sales were approximately $1.3 billion in 2013. The company generated revenues of $137.1 million, up 67.0% from 2012. The Aug 2013 merger with New-York based Seamless was a significant revenue contributor.
GrubHub targets independent restaurants, which account for 61.0% of all U.S. restaurants. Per the company, Americans spent approximately $67.0 billion on takeout at these independent eateries, which is expected to jump rapidly. We believe that improving mobile engagement will boost GrubHub's top-line growth in 2014.
Moreover, GrubHub enjoys a first mover's advantage in the online and mobile delivery service market. The company's strong base of restaurant partners well positions it to face intensifying competition from the likes of OpenTable, going forward.
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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