The Zacks Analyst Blog Highlights: Alcoa, Codexis, Dell, Hewlett Packard and International Business Machines

CHICAGO, April 11, 2011 /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: Alcoa Inc. (NYSE: AA), Codexis Inc. (Nasdaq: CDXS), Dell Inc. (Nasdaq: DELL), Hewlett Packard Co. (NYSE: HPQ) and International Business Machines Corp. (NYSE: IBM).

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Here are highlights from Friday's Analyst Blog:

Alcoa Announces Carbon Emissions Project

Alcoa Inc. (NYSE: AA) in collaboration with Codexis Inc. (Nasdaq: CDXS) and CO2 Solution Inc. announced a new pilot program for carbon capture technology. The pilot program focuses on capturing carbon emissions, neutralizing them and turning them into a commercially viable product.

Alcoa will fund the project with $13.5 million from the U.S. Department of Energy.  The companies will use scrubber technology to capture the emissions and then collaborate to treat a byproduct of aluminum manufacturing called alkaline clay.

The project will try to combine treated flue gas, enzymes and alkaline clay to make a mineral-rich product for use in environmental reclamation projects.

The company secured government grant to find ways of converting captured carbon dioxide emissions into useful products such as fuel, plastics, cement and fertilizers.

The pilot program is a part of Alcoa's ongoing commitment to enhance its operational sustainability. Moreover, it will use an innovative and proprietary in-duct scrubber technology to capture emissions.

Codexis and CO2 Solution have been collaborating since late 2009 on the development of custom carbonic anhydrase (CA) enzymes and processes that could significantly decrease the cost of carbon dioxide capture from industrial sources.

In January, Alcoa posted better-than-expected year-over-year results for the fourth quarter of 2010 with net earnings and revenues exceeding the Zacks Consensus Estimate. The company continues to benefit from its cost saving efforts. We believe the cost cuts will make Alcoa more competitive when markets fully recover.

The annual global consumption of aluminum products, both upstream and downstream, is expected to double over the next 15 years. This consumption boom will be driven primarily by growth in China, India, Russia and Brazil, whose demographics are accelerating development. However, Alcoa is facing declining aluminum prices, higher input costs and significant restructuring charges, which could pressure margins in the near to medium-term.

We currently maintain our Neutral recommendation on Alcoa. Currently, we have a Zacks #3 Rank (Hold) on the stock.

DELL to Enrich Cloud Services

Dell Inc. (Nasdaq: DELL) has long been working to go beyond its traditional PC and server business into the higher-end data storage market. Dell is now planning to spend a handsome $1.0 billion to build its cloud computing business.

Dell expects to open 12 data centers by the end of this year and 10 more within the next fiscal year. Equipped with the latest technology solutions and services, the new data centers will help customers better manage their technology budgets through less emphasis on infrastructure management and more on technology innovation. They can run programs and store information in Dell-operated centers, accessing them over the Internet, thereby reducing ownership cost.

Notable storage vendor acquisitions by Dell in the past four years include EqualLogic, Compellent Technology and Ocarina Networks. Last year, Dell also showed a keen interest in storage vendor 3Par, but was ultimately edged out by rival Hewlett Packard Co. (NYSE: HPQ) in a bidding war. Barring this loss, Dell has seen successful on the acquisition front, bringing the other companies under its umbrella and strengthening its storage/cloud-based offerings.

As per the findings of U.S. research firm Gartner, the market for cloud services could grow to $102.1 billion in 2012 from $68.3 billion in 2010. This opportunity has also inspired another tech major, International Business Machines Corp. (NYSE: IBM), to announce a cloud-based software for its customers.

However, we find Dell in a relatively better position to capitalize on storage opportunities, given its rich cloud-portfolio. We are encouraged by Dell's shift in focus from PC and server roots to becoming a data-center vendor.

Apart from this, Dell is also investing in high growth countries such as Brazil, Russia, India, and China, and recently announced its plan to expand in India. We remain confident about Dell's expansion strategy.

However, concerns for the company include soft demand from the consumer vertical, a high debt level and stiff competition in the cloud and computing space.

Currently, Dell has a Zacks #1 Rank, which equates to a short-term Strong Buy recommendation.

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