The Zacks Analyst Blog Highlights: AT&T, Google, Verizon Communications, Sprint and Aetna

Dec 02, 2013, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, Dec. 2, 2013 /PRNewswire/ -- 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 AT&T Inc. (NYSE: T-Free Report), Google (Nasdaq: GOOG-Free Report), Verizon Communications Inc. (NYSE: VZ-Free Report), Sprint Corp. (NYSE: S-Free Report) and Aetna Inc. (NYSE: AET-Free Report).


Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Friday's Analyst Blog:

AT&T Boosts Revs with Holiday Offers

Leading wireless carrier, AT&T Inc. (NYSE: T-Free Report) announced on Nov 26 that it is offering various discounted deals on its products and services in an attempt to lure customers into holiday season shopping. These offers pertain to various merchandise such as phone case, car chargers tablets, key boards, stands, blue tooth and related products. Given the new offers we expect the company to generate additional revenues through higher sales that would be accretive to its earnings going forward.

Despite being a positive announcement to the market, the company's share prices did not register much change. However, it closed at slightly higher levels on Wednesday compared to Tuesday trading.

The sale season at AT&T begins before Thanksgiving Day and extends beyond Dec 31. Notable among the offers is the availability of Samsung Galaxy Note 8.0, which runs on Google (Nasdaq: GOOG-Free Report) Android platform, for $99.99 when bundled with other Samsung smartphones. AT&T has established various deals for different occasions such as Thanksgiving, Black Friday and Cyber Monday.

Further, AT&T plans to woo customers with early upgrades to smartphones and tablets every year. The program allows customers to get new phones without paying extra on down payment, activation fee, upgrade or financing fee. New and existing customers due for an upgrade can avail this offer.

The carrier has also begun to offer a new device upgrade service called AT&T Next that allows subscribers (both new and existing customers) to change their old smartphones or tablets every year without separately paying any upgrade fee or down payment. The company's Mobile Share plan is also gaining popularity and already has 16 million subscribers. Management intends to launch new high-tier plans in the coming quarters.

We believe these sales offers would likely support AT&T's revenue growth target for the year. The company's revenues are also likely to be driven by contributions from wireless services.

AT&T, which operates with Verizon Communications Inc. (NYSE: VZ-Free Report)and Sprint Corp. (NYSE: S-Free Report), has a Zacks Rank #3 (Hold).

Aetna Downgraded to Neutral


On Nov 27, 2013, we downgraded our recommendation on Aetna Inc. (NYSE: AET-Free Report) to Neutral from Outperform; following its third quarter earnings miss, with a 1.96% negative earnings surprise. The health insurer presently carries a Zacks Rank #3 (Hold).


Why downgrade?

On Oct 29, 2013, Aetna reported third-quarter 2013 earnings of $1.50 per share, down 3 cents per share from the Zacks Consensus Estimate. Earnings were also down 3.2% year over year.


Aetna has also witnessed a decline in earnings estimate since the earnings release. The Zacks Consensus Estimate for 2013 went down by 0.3% to $5.87 per share as 5 out of the 17 analysts pulled down their estimates over the last 30 days. The same for 2014 went down by 2.4% as 11 out of the 18 analysts took a similar stance.


During the third quarter conference call management sounded cautious about its 2014 earnings outlook as it announced that the worst-case scenario for 2014 is that per-share earnings from operations will remain flat, compared with 2013 earnings.


Some of the headwinds facing Aetna in 2014 are Medicare Advantage reimbursement cuts and the industry premium tax.


The company is also expecting margin pressure in experience-rated group commercial and an uptick in the cost trend.


The low interest rate environment is expected to continue into 2014, which would negatively impact Aetna's investment income


Nevertheless, tailwinds such as incremental Coventry accretion, fixed cost leverage and cost management; expanding international business, expansion of its Accountable Care Organization strategy and share repurchases will aid earnings.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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