The Zacks Analyst Blog Highlights: Tesla Motors, Toyota Motor, Fox Factory Holding, Twitter and Omnicom Media
CHICAGO, May 29, 2014 /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 the Tesla Motors, Inc. (Nasdaq:TSLA-Free Report), Toyota Motor Corp. (NYSE:TM-Free Report), Fox Factory Holding Corp (Nasdaq:FOXF-Free Report), Twitter (NYSE:TWTR-Free Report) and Omnicom Media Group (NYSE:OMC-Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Wednesday's Analyst Blog:
Tesla Gets Junk Rating from S&P
Tesla Motors, Inc. (Nasdaq:TSLA-Free Report) has received a "B-" credit rating from Standard & Poor's Ratings Services. The rating is six notches below investment grade and falls in the junk category. This is an unsolicited rating with no input from Tesla regarding its future plans.
S&P assigned a stable outlook to the rating, which indicates low possibility of a rating upgrade or downgrade in the near term. The outlook is based on the projections that gross margins of Tesla will continue to improve over the next year, as the company works to fulfill the demand for Model S.
The low credit rating is a result of Tesla's limited market share, small operating scale compared with other automakers, focus on a niche product segment and uncertainty related to demand in the long term. Moreover, the electric carmaker might face difficulty in managing risks related to future technological displacement and competition. Competition in the field of green vehicles is expected to increase in the future, which will hamper Tesla's prospects. According to S&P, these factors raise doubts about the long-term prospects, despite the positive aspects of the company.
Tesla raised $2.3 billion from convertible notes issue in Mar 2014. Of these, notes worth $800 million are due in 2019 and the remaining $800 million notes will mature in 2021. The company issued the notes to partly finance its planned Gigafactory.
Tesla designs and manufactures electric vehicles and electric vehicle powertrain components for partners such as Toyota Motor Corp. (NYSE:TM-Free Report) and Daimler.
The automaker currently carries a Zacks Rank #4 (Sell). Fox Factory Holding Corp (Nasdaq:FOXF-Free Report), a Zacks Rank #1 (Strong Buy) stock, is currently performing well in the automobile industry.
Twitter Strikes Deal with Omnicom
Recently, Twitter (NYSE:TWTR-Free Report) inked a deal withOmnicom Media Group (NYSE:OMC-Free Report) valued at approximately $230.0 million. The deal will allow Omnicom to integrate its programmatic agency Accuen into mobile ad exchange MoPub, which Twitter acquired in Sep 2013.
MoPub is an ad exchange that allows advertisers to buy mobile ads in real time. The Omnicom deal is expected to boost Twitter's status as an advertising platform that will attract new advertisers.
This is not the first time that Twitter has partnered with a media company. In 2013, it had formed partnership with Publicis' Starcom Mediavest Group and WPP.
Per Gartner, mobile advertising spending is forecast to reach $18.0 billion in 2014, while the market is expected to grow to $41.9 billion by 2017. This presents a significant growth opportunity for Twitter.
Per eMarketer, Twitter is seeing strong user growth in the Asia-Pacific, helping the messaging platform compensate for a slowdown in the US and Europe. eMarketer forecasts Twitter's global user base will increase 24.4 per cent in 2014, led by big gains in countries like Indonesia and India.
We believe that new products and services will be major growth drivers going forward. Moreover, as spending on online advertising is expected to increase manifold compared to traditional media, we believe that Twitter has massive growth opportunity owing to its strong mobile products. International expansion and accretive acquisitions are other significant positives.
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
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