Star Bulk Carriers, Avis Budget Group, Novatel Wireless, Verizon Communication and AT&Thighlighted as Zacks Bull and Bear of the Day

Sep 27, 2013, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, Sept. 27, 2013 /PRNewswire/ -- Zacks Equity Research highlights Star Bulk Carriers (Nasdaq: SBLK-Free Report) as the Bull of the Day and Avis Budget Group (Nasdaq: CAR-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis ontheNovatel Wireless Inc. (Nasdaq: NVTL-Free Report), Verizon Communication Inc. (NYSE: VZ-Free Report) and AT&T, Inc. (NYSE: T-Free Report).


Here is a synopsis of all five stocks:

Bull of the Day:

Star Bulk Carriers (Nasdaq: SBLK-Free Report), Zacks Rank #1 (Strong Buy), is a global shipping company which transports major bulk items such as iron ore, coal, grain, steel, and fertilizer.  Star Bulk owns five Capesize and eight Supramax ships and manages six third party dry bulk vessels.  It has also been sub contracted for management services for seven product tankers.   

The company is on an expansion path and has entered agreements to construct two Capesize dry bulk vessels (180,000 deadweight ton) for delivery in Q4 2015 and Q1 2016.  It also has letters of intent for construction of two Ultramax drybulk vessels (60,000 deadweight ton) for delivery in 2015.  The new vessels are expected to use eight times less fuel than conventional models at slow steaming and fuel savings could double at higher speeds.

Macro drivers:

The macro backdrop has brightened for Star Bulk with global economic activity showing signs of recovering.  The JP Morgan Global Purchasing Managers Composite Output Index rose 1.2 to 55.2 in August and hit its highest level since February 2011.  New orders were reported up at a 30 month high.

More importantly, the Baltic Dry index has surged in recent weeks and is confirming an upswing in economic activity and vessel demand.  Since early August, the index has more than doubled rising from 1,000 to a recent high over 2,200.

Earnings trend:

One factor driving Star Bulk's Zacks #1 Rank is the large upward revision to 2013 and 2014 earnings per share estimates. The Zacks Earnings per Share Estimate for 2013 has increased $0.73 to $0.57 over the past 30 days.  Likewise, the 2014 outlook has surged $0.74 to $0.43 over the same period.  The outlook for profits has gone from loss to profit.

Bear of the Day:

Avis Budget Group (Nasdaq: CAR-Free Report) Zacks Rank #5 (Strong Sell), is a provider of vehicle rental services through its Avis and Budget brands. Although the stock had performed strongly into early June, it has been under pressure recently because of reduced confidence in its earnings outlook.  

In the wake of its earnings report on August 6, the Zacks Consensus Earnings per Share Estimates for Avis Budget have declined $0.16 to $2.20 and $0.21 to $2.73 for 2013 and 2014 respectively.    Earnings have been pressure due to weakness in Europe and Australia and rising fleet costs in North America.  The chart displays the trend in earnings estimate revisions.  The trend has turned flat to lower in recent months and caused the share price to stall out.

The outlook for North America may be deteriorating further as Thursday Hertz guided its 2013 EPS outlook lower to a range of $1.68 to $1.87 compared to the Zacks Earnings per Share Consensus of $1.88.  Hertz noted weaker than expected on airport volumes.  Hertz was a Zacks Rank #3 (Hold) prior to its earnings guidance and is in jeopardy of seeing its Zacks Rank slip.  The announcement from Hertz spilled into Avis which also saw its share price weaken suggesting industry wide profit pressures.

Technically, Avis Budget was able to hold the $27.00 area in June and August.   A breach of this area could cast a dark cloud over the chart picture.

Additional content:

Novatel Offers MiFi Homes

Novatel Wireless Inc. (Nasdaq: NVTL-Free Report) – one of the leading manufacturers of wireless data modems – launched MiFi Home, which connects digital telephone service and data access through a portable device. It can support up to 10 Wi-Fi based devices along with three Ethernet ports for connecting printers and network storage devices.

The device is also helpful for small businesses as it supports Voice over LTE (VoLTE). The VoLTE features video calling, multi-device and multimedia sharing services across mobile broadband devices. Moreover, the device allows users to connect to Internet and voice services like caller ID, call forwarding, call waiting, call holding and three-way calling.

The MiFi device also features Wi-Fi security as it is well protected with NAT firewall and also has internal and external antenna for better voice and data support. Moreover, it also offers A-GPS for E911 and 802.11 a/b/g/n 2.4 GHz and 5 GHz Wi-Fi support.

Novatel already supplies its LTE-based MiFi devices to the top three carriers in the U.S., namely, Verizon Communication Inc. (NYSE: VZ-Free Report) and AT&T, Inc. (NYSE: T-Free Report). Verizon will soon launch MiFi 4620 LE with an extended battery pack while AT&T is using the MiFi 2 products.

In order to boost its top line, the company is continuously upgrading its software and launching innovative devices in an attempt to drive the Mi-Fi usage. Recently, Novatel also introduced MiFi 500 LTE with Sprint.

However, the company is facing stiff competition from low-cost Asian manufacturers, including ZTE and Huawei Technologies. Moreover, in recent times, most smartphones have built-in hot-spot facilities, thus completely bypassing the need for any MiFi modem.

Recently, Novatel has decided to restructure its businesses. Management stated that the company is witnessing growing overlap of operations in its Mobile Computing and M2M business segments.

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