The Zacks Analyst Blog Highlights:Apple, Google, Hewlett-Packard, Microsoft and Strayer Education
CHICAGO, Feb. 27, 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 Apple (Nasdaq:AAPL-Free Report), Google (Nasdaq:GOOG-Free Report), Hewlett-Packard (NYSE:HPQ-Free Report), Microsoft (Nasdaq:MSFT-Free Report) and Strayer Education, Inc. (Nasdaq:STRA-Free Report).
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Here are highlights from Wednesday's Analyst Blog:
Apple, Samsung Settlement Talks Fail
Apple (Nasdaq:AAPL-Free Report) failed to reach a settlement with Samsung regarding patent disputes in the recently held off the court meeting. The meeting was arranged following the orders of the San Jose District Court judge Lucy Koh. However, the failure makes the March 31 patent-infringement trial inevitable now.
In an attempt to dominate the global smartphone market, both Apple and Samsung continue to fight each other over intellectual properties (IP). The fight dates back to 2011 when Apple accused Samsung of copying the iPad and the iPhone.
Samsung also alleged that Apple devices had violated its patents and in retaliation lodged a number of legal suits all over the world. The current patent infringement suit was filed by Apple, which claimed that Samsung devices such as Galaxy S III violated its technology.
We believe that a settlement would have benefited Samsung more than Apple. The iPhone maker currently has an upper hand in the legal battles as it has won a number of verdicts against the South Korean smartphone maker in recent times. Currently, Samsung owes more than $900 million to Apple as damages.
Though Apple seems to have emerged victorious, yet the fact is that the victory remains confined to the courtroom only. As per market research firm IDC, Samsung accounted for nearly 29% of the global smartphone shipments in the just concluded quarter whereas Apple's share fell from 20.9% to 17.9% on a sequential basis.
Apple's loyal customer base, international expansion, competitive pricing strategy and a solid cash position are expected to aid long-term growth. However, increasing competition from the likes of Google (Nasdaq:GOOG-Free Report), Hewlett-Packard (NYSE:HPQ-Free Report) and Microsoft (Nasdaq:MSFT-Free Report) in most of its major product segments, possible delays in product launch, higher operating expenses and increasing legal complexities are headwinds.
Currently, Apple has a Zacks Rank #3 (Hold).
Strayer Education Upped to Strong Buy
On Feb 25, Zacks Investment Research upgraded Strayer Education, Inc. (Nasdaq:STRA-Free Report) to a Zacks Rank #1 (Strong Buy). Strayer's share price has been on an upswing following the release of solid fourth quarter results on Feb 21.
Why the Upgrade?
Strayer Education's fourth-quarter 2013 adjusted earnings of $1.32 per share surpassed the Zacks Consensus Estimate of 98 cents by 34.7%. We believe that the earnings beat was due to a 7% decline in outstanding shares in the quarter as a result of significant share repurchases made in the prior quarters.
Total revenue of $124.1 million beat the Zacks Consensus Estimate of $119 million by 4.1%.Total revenue in the quarter fell 13% from the comparable prior-year quarter due to continued weak enrollment trends, partially offset by increase in revenue per student. Revenue per student increased 5% during the quarter, owing to higher student retention rate and phasing out of the previous scholarships program.
The company began a cost reduction plan in the fourth quarter. The plan, which resulted in a charge of approximately $55 million in the fourth quarter, is expected to reduce annual operating expenses by an estimated $50 million beginning 2014.
As part of this restructuring, Strayer University closed approximately 20 physical locations predominantly in the Midwest. The completion of the restructuring will allow the company to allocate its resources in profitable areas and improve its business in the near future.
The company is also expected to benefit from the recent changes in educational policies. The policies will improve the affordability of the programs and more students will be encouraged to opt for higher education thus providing the much needed impetus to enrollment levels.
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