The Zacks Analyst Blog Highlights:Xerox, Siemens, General Electric, 3M and Raven Industries

News provided by

Mar 21, 2014, 09:30 ET

CHICAGO, March 21, 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 Xerox Corporation (NYSE:XRX-Free Report), Siemens AG (NYSE:SI-Free Report), General Electric Co. (NYSE:GE-Free Report), 3M Co. (NYSE:MMM-Free Report) and Raven Industries Inc. (Nasdaq:RAVN-Free Report).

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

Here are highlights from Thursday's Analyst Blog:

Analytics: A Shot in the Arm for Healthcare

Never mind the political push-back against the Affordable Care Act (ACA), aka Obamacare, it is steadily proving to be a blessing in disguise for healthcare analytics. Traditionally laggards in implementing information technology (IT) solutions, healthcare companies are now scrambling to incorporate analytics as Obamacare induces a complete rethink of the way the industry operates.

The Roots

Healthcare expenditures per capita in the U.S., presently 2.4 times higher than that of other developed countries, are estimated to increase 67.9% over the next decade. U.S. healthcare spending is billed at over $2.6 trillion annually. More than half of that is reportedly being wasted, primarily due to unnecessary hospitalizations, redundant tests, operational inefficiency and excessive end-of-life care.

Healthcare organizations today are forced by competitive pressures to provide more cost-efficient, patient-centric outcomes. Increasing regulatory oversight places further focus on accountability in the industry. The cost dynamics of the healthcare industry are gradually shifting, driven by rising incidents of chronic illnesses, infectious diseases and increasing life expectancy. These cumulative factors indicate an urgent need for improved perception of underlying trends, thus forging a path to differentiation.

With healthcare dynamics undergoing a massive transformation, the industry seems to be on the brink of a strategic shift in operations. The survival strategy is likely to be a seamless transition to an efficient, data-based system increasingly driven by value rather than volume. Analytics seems to be the silver lining for the daunting challenges facing the healthcare industry.

Healthcare Analytics to the Rescue

In a world of entrenched inefficiencies and suboptimal clinical outcomes, analytics has the power to pivot and transform the healthcare industry. The sheer abundance of data that overwhelms healthcare companies makes a compelling case for integrating advanced analytics to unlock and apply new insights from available information.

At present, descriptive analytics are extensively used as reporting tools. Descriptive analytics encompasses data visualization, standardized reporting and historic trend analysis. Healthcare companies also need to exploit the dimensions of simulation and scenario analysis to capitalize on information insights, cost efficiencies and thereby achieve targeted revenue growth.

Companies like Xerox Corporation (NYSE:XRX-Free Report) andSiemens AG (NYSE:SI-Free Report) early-on realized that data, predictive analytics and modeling could be a significant part of the answer to spiraling costs and eroding quality of healthcare. Siemens' wide portfolio of performance-driven diagnostics IT solutions provides effective support in diagnosing, monitoring and managing diseases, while its healthcare analytics integrates patient data across the care continuum from prevention and early detection to diagnosis, treatment and aftercare. Xerox, a veteran in text-mining and technology, has been applying healthcare analytics tools for over a decade, winning more that $200 million worth of IT contracts since the ACA was passed.

Industry Developments

Even diversified conglomerates like General Electric Co. (NYSE:GE-Free Report) and 3M Co. (NYSE:MMM-Free Report) are striving to find pockets of strength amid industry upheaval as evidenced by their recent acquisitions.

GE Healthcare recently bought healthcare workforce analytics firm API Healthcare in order to expand its current Hospital Operations Management (HOM) portfolio, which gives hospitals real-time access to operational data. In order to reduce costs and improve productivity, GE Healthcare intends to optimize asset utilization and workforce alignment, as well as eliminate patient flow bottlenecks. With this acquisition, GE Healthcare is likely to trim hospital operations costs with a mix of real-time data, software, powerful analytics and professional services.

In Feb 2014, 3M acquired leading healthcare data analytics and business intelligence provider, Treo Solutions, to facilitate customers' access to better, more comprehensive data across the spectrum of patient care. The acquisition is purported to extend real-time data analytics and payment redesign globally. 3M Healthcare delivers intelligent software and consulting services that are used to compile, classify, and analyze health information. The acquisition is expected to expand its horizons and unlock additional value.

Analytics can thus be used to build multidimensional predictive models, reduce costs, improve outcomes and empower patients. With access to better healthcare facilities, aligning pay with performance and trimming costs, analytics holds the power to put healthcare companies back on a strong growth trajectory.

Double-Edged Sword

However, the wealth of information that bombards healthcare companies both facilitates and complicates the ability to achieve and influence desirable outcomes. The sheer magnitude of data makes it progressively difficult to differentiate between critical data and clutter. The data paradox – a dilemma presented by too much data and too little insight – is an overwhelming obstacle to creating effective analytics strategies.

Other roadblocks for adoption of analytics include qualms about the quality and integrity of data, ownership of the data and a culture that does not encourage information sharing.

The Future

From a traditional base of transaction monitoring using basic reporting tools and spreadsheets, healthcare analytics is steadily progressing toward predictive analytics, which predicts future activities and model scenarios using simulation and forecasting techniques. Predictive analytics has the power to "see the future," and predict patient behavior, thus generating more personalized healthcare.

In healthcare industry, the blend of advanced analytics and the vast ocean of data is an absolute gold mine. Companies like General Electric and 3M have probably just scratched the surface and are likely to reap huge benefits in future.

However, there is more than just a financial incentive as it involves a matter of life and death.

Raven Down to Strong Sell

On March 20, Zacks Investment Research downgraded Raven Industries Inc. (Nasdaq:RAVN-Free Report), manufacturer of industrial goods, to a Zacks Rank #5 (Strong Sell).

Why the Downgrade?

Raven has witnessed sharp downward estimate revisions after reporting disappointing fourth-quarter fiscal 2014 results on March 12. The stock also fell around 11% in the trading session after the earnings release.

In the quarter, Raven's earnings declined 23% year over year to 23 cents per share. The reported figure fell short of the Zacks Consensus Estimate of 32 cents. Increased raw material costs in the Engineered Films segment, increased investments in research and development (R&D) for Aerostar and lower sales volume in Applied Technology led to the year-over-year decline.

Sales increased 3% year over year to $92.6 million in the quarter but missed the Zacks Consensus Estimate.

For the full year 2014, earnings per share fell 19% year over year to $1.17, lagging the Zacks Consensus Estimate of $1.26. Revenues fell 3% to $395 million from $406 million in the previous fiscal, missing the Zacks Consensus Estimate.

For first-quarter fiscal 2015, Raven expects solid sales growth in Engineered Films from agriculture, along with higher OEM deliveries in Applied Technology. However, contract manufacturing declines and the uncertain agricultural aftermarket will pose challenges.

In the first quarter, Raven expects profits to be flat to slightly down. Thereafter, the company is expected to deliver increased profits in the balance of the year. Nevertheless, delay in contracts, pricing pressure, general market softness and volatile raw-material costs will hurt Raven's earnings.

Following the fourth-quarter earnings announcement, the Zacks Consensus Estimate for Raven declined 14% to $1.21 per share for 2015 and 15.9% to $1.32 per share for 2016.

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

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.

Get the full Report on XRX - FREE

Get the full Report on SI - FREE

Get the full Report on GE - FREE

Get the full Report on MMM - FREE

Get the full Report on RAVN - FREE

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
[email protected]
http://www.zacks.com

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Logo - http://photos.prnewswire.com/prnh/20101027/ZIRLOGO

SOURCE Zacks Investment Research, Inc.