The Zacks Analyst Blog Highlights:Tiffany & Company, Signet Jewelers, Zale, Walgreen and Greenway Medical Technologies

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Aug 27, 2012, 09:30 ET

CHICAGO, Aug. 27, 2012 /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 Tiffany & Company (NYSE:TIF), Signet Jewelers Limited (NYSE:SIG), Zale Corporation (NYSE:ZLC), Walgreen (NYSE:WAG) and Greenway Medical Technologies, Inc. (NYSE:GWAY).

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Here are highlights from Friday's Analyst Blog:

Earnings Preview: Tiffany

Tiffany & Company (NYSE:TIF) is slated to report its second-quarter 2012 financial results on August 27, 2012. The current Zacks Consensus Estimate for the quarter stands at 75 cents a share, indicating an estimated year-over-year decrease of about 12.8%. Revenue, as per the Zacks Consensus Estimate, is $887 million.

First-Quarter Recap

Tiffany's quarterly earnings of 64 cents a share, missed the Zacks Consensus Estimate of 69 cents, and dropped from 67 cents earned in the prior-year quarter. Tiffany, which faces stiff competition from Signet Jewelers Limited (NYSE:SIG) and Zale Corporation (NYSE:ZLC), posted net sales of $819.2 million during the quarter, up 8% from the prior-year quarter. Total revenue came ahead of the Zacks Consensus Estimate of $818 million.

Guidance Went Down

Given the weaker-than-expected results and sluggish economic recovery in most of the countries, management trimmed its fiscal 2012 outlook. The company projects earnings in the range of $3.70 to $3.80 per share, down from $3.95 to $4.05 forecasted earlier. Moreover, total net sales are expected to grow in the range of 7% to 8%, down from 10% predicted previously.

Agreement of Estimate Revisions

During the last 30 days, 4 out of 18 estimates have been revised downwards, while none were increased for the upcoming quarter. Moreover, for fiscal 2012 the story remains the same with 5 estimates (out of 19) being revised downwards, while none were revised higher.

In the last seven days, 2 out of 19 estimates have been revised downwards for fiscal 2012, while none were raised.

Magnitude of Estimate Revisions

The Zacks Consensus Estimate for the quarter remained stable over the last 30 days. For fiscal 2012, estimates decreased 4 cents to $3.63, as analysts expect both revenue and earnings to decline in comparison to the prior year, on account of a sluggish economic recovery in most of the countries and soft demand for jewelry. Moreover, the downward pressure on earnings estimates was also in response to the guidance cut.

Mixed Surprise History

With respect to earnings surprises, Tiffany has beat as well as missed the Zacks Consensus Estimate over the last four quarters in the range of negative 7.3% to positive 22.9%. The average remained at positive 7.5%, indicating that the company has surpassed the Zacks Consensus Estimate by the same magnitude in the trailing four quarters.

Our Recommendation

Currently, the stock holds a Zacks #3 Rank that translates into a short-term 'Hold' rating. However, we maintain a long-term 'Underperform'

rating on Tiffany following the lackluster outlook provided for the current fiscal.

New EHR for Walgreen

In an effort to provide greater flexibility to health care customers, Walgreen (NYSE:WAG) recently started installing WellHealth EHR, the electronic health record (EHR) solution from Greenway Medical Technologies, Inc. (NYSE:GWAY), a player in the health care information technology (HCIT) market. The drug retail giant has already deployed the EHR in over 200 of its stores and plans to introduce it across 8,000 locations by the summer of next year.

As a part of Walgreen's HealthCloud initiative, the EHR solution will help the company transform its traditional drugstores to health and daily living destinations. Working as a single patient view of Walgreen, the WellHealth EHR will provide the latest patient immunization and health testing information, along with pharmacy information irrespective of where the patient received the service. The two parties entered into a partnership in 2010 when Walgreen first deployed Greenway's PrimeSuite in Walgreen's worksite health centers for primary and acute care.

With the recent verdict of the Supreme Court upholding the Patient Protection and Affordable Care Act of 2010 (PPACA) (also known as Obamacare), the U.S. health care industry is making an all-out effort to rope in hospitals, doctors, pharmacists and others through the EHR and electronic medical records (EMRs).

The recent data shows that the number of hospitals using health information technology (IT) has more than doubled in the last two years.

Moreover, nearly 2,000 hospitals and more than 41,000 doctors have received $3.1 billion in incentive payments for ensuring 'Meaningful Use'

of health IT, particularly, certified EHR. The incentives will be offered for a period of 4–5 years, after which physicians will be penalized for not adopting proper measures.

Notably, "Meaningful Use" is a criterion specified under the EHR incentive program, which is designed to stimulate the use of technology in healthcare. Funded by the HITECH Act, the program enables providers to adopt EHR and meet Meaningful Use needs in order to earn reimbursements and avoid Medicare penalties.

We believe that Walgreen is well placed to gain a meaningful share of the multi-billion dollar American Recovery and Reinvestment Act (ARRA)-related healthcare information technology investment opportunity. We have a long-term Neutral recommendation on Walgreen. The stock currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.

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