The Zacks Analyst Blog Highlights:Broadcom, Target, Flowers Foods, B&G Foods and Omega Protein

Jun 25, 2013, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, June 25, 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 Broadcom Corporation (Nasdaq: BRCM-Free Report), Target Corporation (NYSE: TGT-Free Report), Flowers Foods, Inc. (NYSE: FLO-Free Report), B&G Foods Inc. (NYSE: BGS-Free Report) andOmega Protein Corp. (NYSE: OME-Free Report).


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

Here are highlights from Monday's Analyst Blog:

Broadcom 5G WiFi to Be Industry Benchmark

Leading semiconductor solutions provider Broadcom Corporation's (Nasdaq: BRCM-Free Report) 5G WiFi was selected by Wi-Fi Alliance, an association that promotes Wi-Fi technology and certifies Wi-Fi products, for its Wi-Fi CERTIFIED ac test suite. Based on the wireless computing standard IEEE 802.11ac, Wi-Fi CERTIFIED ac is the latest certification program from Wi-Fi Alliance. The latest test suite will be using Broadcom's BCM4360 chip for validating interoperability of various products.

5G WiFi technology is being globally adopted across various product segments. IEEE 802.11ac standard for 5G WiFi delivers reliable and faster Internet speeds, faster file transfers and a more effective way of power line communications. Banking on improved networking solutions, the new technology supports high-resolution Internet video, online gaming and offers broad coverage. The higher capacity and improved power management with Wi–Fi CERTIFIED ac suite is likely to be perfectly suitable for new products and services.

Broadcom continues to drive innovation and engineering excellence across a broad range of communication end markets to help its customers enhance device performance and improve overall power efficiency. The innovative technologies related to connectivity, bandwidth and content enable the company to capture a sizeable market share. The 5G WiFi solutions for all product segments include the BCM4335 combo chip, which  is suitable for  smartphones and tablets and other connected  devices.

Based in Irvine, Calif., Broadcom is engaged in designing and marketing semiconductor components of network voice, video, and data traffic for various applications. In the last reported quarter, Broadcom reported total revenues of $2.0 billion, up 11.1% year over year.

Bearish View on Target

On Jun 19, we downgraded our long-term recommendation on Target Corporation (NYSE: TGT-Free Report) to Underperform based on the company's dismal first-quarter fiscal 2013 performance. The stock currently carries a Zacks Rank #4 (Sell).

Why the Downgrade?

Estimates of this operator of general merchandise and food discount stores in the United States have shown a downtrend since the company reported disappointing first-quarter results on May 22, 2013 that prompted management to take a conservative stance on its future earnings.

The quarterly earnings, including U.S. and Canadian operations, came in at 81 cents a share that dipped from $1.03 reported in the prior-year quarter. Target's adjusted earnings of $1.05 per share also fell from $1.11 delivered in the year-ago quarter. This relates to results from U.S. operations only. However, it managed to exceed the Zacks Consensus Estimate of 85 cents.

Nevertheless, the bottom-line results came below Target's earlier projection of $1.10 to $1.20 per share due to lower-than-anticipated sales witnessed principally in apparel and other seasonal and weather-related categories. Total revenue edged down 1% to $16,706 million from the prior-year quarter, and also came below the Zacks Consensus Estimate of $16,897 million.

Following soft first-quarter results, Target now projects fiscal 2013 earnings between $4.70 and $4.90 per share down from a range of $4.85 to $5.05 forecasted earlier.

Consequently, we are witnessing a fall in the Zacks Consensus Estimate. The Zacks Consensus Estimate for the second and third quarters of fiscal 2013 dropped 7.7% and 3.3%, to 96 cents and 88 cents a share, respectively, over the past 60 days. Moreover, the Zacks Consensus Estimate for fiscal 2013 fell by 3.8% to $4.32 and for 2014 it tumbled 1.6% to $5.46 per share, over the same time frame.

Cause for Concern

We expect the footfall to be challenging given the near-term headwinds such as higher payroll taxes, sluggish economic recovery and e-Commerce competition. The company also lowered its comparable-store sales guidance to 2%–2.5% from 2.7%. We believe that the macro-economic condition is still not favorable and consumers will tread cautiously against discretionary items. Another factor that limits the company's upside potential is the greater concentration of Target's revenue generating capability in a few regions of the United States, thereby posing a competitive threat.

Other Stocks That Warrant a Look

Not all stocks in the retail sector are performing as disappointingly as Target. Other stocks worth considering include Flowers Foods, Inc. (NYSE: FLO-Free Report), B&G Foods Inc. (NYSE: BGS-Free Report) andOmega Protein Corp. (NYSE: OME-Free Report), all of which hold a Zacks Rank #1 (Strong Buy), and are expected to continue with their upbeat performance.

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

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