The Zacks Analyst Blog Highlights: Nasdaq OMX Group, Sprint Nextel, Clearwire, Verzion Communications and AT&T

Jul 08, 2013, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, July 8, 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 Nasdaq OMX Group Inc. (Nasdaq: NDAQ-Free Report), Sprint Nextel Corp. (NYSE: S-Free Report), Clearwire Corporation (Nasdaq: CLWR-Free Report), Verzion Communications Inc. (NYSE: VZ-Free Report) and AT&T Inc.  (NYSE: T-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:

Nasdaq Upgraded from Underperform

On Jul 5, we upgraded our recommendation on Nasdaq OMX Group Inc. (Nasdaq: NDAQ-Free Report) to Neutral based on its latest acquisitions that create incremental revenue opportunities. However, the sluggish trading volumes environment and intense competition continue to pose risks.

Why the Upgrade?

Estimates for this global stock exchange operator witnessed improvement or remained stable after the company reported its first quarter 2013 results on Apr 24. Nasdaq's first quarter earnings of 64 cents surpassed the Zacks Consensus Estimate as well as the prior-year quarter earnings of 61 cents. Total revenue of $418 million edged up 1% year over year but lagged the Zacks Consensus Estimate of $426 million, displaying lower revenues from market and listing services.

However, operating expenses were kept in check with only 2.2% growth, while total order value witnessed improvement. Yet, order intakes plunged and operating margin dipped to 43% from 44% in the year-ago quarter. Overall, Nasdaq delivered positive earnings surprises in all of the last 4 quarters with an average beat of 4.96%.

Following the release of the first-quarter results and culmination of significant acquisitions, the Zacks Consensus Estimate for 2013 stood intact at $2.62 per share in the last 60 days. However, the Zacks Consensus Estimate for 2014 grew 3.4% to $3.04 per share in the last 60 days. With the Zacks Consensus Estimates showing no clear directional pressure in 2013 but some growth in 2014, Nasdaq now has a Zacks Rank #3 (Hold).



Sprint, SoftBank Deal Finally Clears

Sprint Nextel Corp. (NYSE: S-Free Report) has cleared its final round of approvals for the acquisition by Japanese telecom company, SoftBank Corp. The U.S. Federal Communications Commission (FCC) has approved the Sprint-SoftBank deal with majority votes, leading to successful accomplishment of the proposed merger. Last month, the deal received favorable support from the shareholders with 98% votes.

In addition, FCC also approved Sprint's proposed acquisition of the remaining stakes in Clearwire Corporation (Nasdaq: CLWR-Free Report), which it currently does not hold. At present, Sprint holds 50.8% of Clearwire stakes. By acquiring the remaining shares for nearly $14 billion (inclusive of enterprise value), the company will not only achieve full complete control over Clearwire but will also gain access to its 2.5 GHz spectrum portfolio, hence allowing Sprint to solve its spectrum crisis.

With respect of the Sprint-SoftBank merger, we believe it could change the dynamics of the wireless industry, which is dominated by two carriers – Verzion Communications Inc. (NYSE: VZ-Free Report) and AT&T Inc.  (NYSE: T-Free Report). Apart from making the market more competitive, the deal would significantly improve Sprint's liquidity and facilitate key expansion plans that would strengthen its position. With the potential influx of capital, the company is hopeful that the Softbank deal would also aid the acquisition of Clearwire.

The SoftBank deal will support Sprint's multi-billion dollar restructuring program known as Network Vision. Through this plan, the company is concentrating on the core Sprint platform, which includes CDMA, WiMAX and Long-Term Evolution technologies, and the eventual termination of the Nextel platform (iDEN business). Though the company has enough liquidity to address the growing costs of network upgrade, iPhone subsidies, debt maturities and working capital requirements, it needs to bolster its liquidity position buyouts. The transaction would provide Sprint the financial support to build and improve its competitive wireless network.

Sprint has a Zacks Rank #3, implying a short-term (1–3 months) Hold rating.

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


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