Zacks Bull and Bear of the Day Highlights: Align Technology, Baker Hughes, Research In Motion, Apple and Google
CHICAGO, May 3, 2012 /PRNewswire/ -- Zacks Equity Research highlights Align Technology (Nasdaq: ALGN) as the Bull of the Day and Baker Hughes, Inc. (NYSE: BHI) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Research In Motion Ltd. (Nasdaq: RIMM),Apple Inc (Nasdaq: AAPL) and Google Inc (Nasdaq: GOOG).
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Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Align Technology's (Nasdaq: ALGN) first-quarter 2012 adjusted EPS of $0.27 surpassed the Zacks Consensus Estimate of $0.22 and the year-ago quarter adjusted EPS of $0.21. Align witnessed balanced sales growth across all its channels, banking on its core product, Invisalign.
Moreover, Cadent's contribution also helped Align to further penetrate the malocclusion market. Align's focus on the international market, especially in Europe, is encouraging. A successful launch of Invisalign G4 is expected to boost the company's revenues further.
Although Align is facing gross margin compression for several quarters, the gradual pick up in patient traffic is expected to add further life to the company's overall performance. Based on the strong growth potential of the company, we upgraded the stock to Outperform.
We are downgrading our recommendation for Baker Hughes, Inc. (NYSE: BHI) to Underperform from Neutral following its first quarter 2012 results. Baker Hughes earnings declined in the first quarter mainly due to the lower margins in North America and pricing constraints in the pressure pumping sector.
We remain cautious about the pricing pressures, supply chain and raw material constraints in its pricing pressure business in North America, and thus prefer to stay on the sidelines. Although activity is expected to climb in 2012, we remain apprehensive for the geo-political issues that may affect the operations in certain areas.
Hence our downgrade on the stock. Our $40 price objective is based on the 2012 P/E multiple of 10.8x. Our target multiples are well within the historical trading range for the stock.
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RIMM Unveils BB10 OS
Struggling smartphone manufacturer Research In Motion Ltd. (Nasdaq: RIMM) has unveiled a prototype of its much awaited next-generation Blackberry 10 operating system. The new operating system will be much more user-friendly and is expected to be loaded with more applications compared to its legacy smartphones.
Research In Motion is facing severe problems due to an increasingly competitive landscape, primarily from Apple Inc's (Nasdaq: AAPL) iPhone and from other smartphone manufacturers which run Google Inc's (Nasdaq: GOOG) Android platform. The primary reason behind Research In Motion's huge market share loss in the high end smartphone segment is the lack of applications in its legacy handsets.
Even in the lucrative emerging markets, Research In Motion is facing pricing pressure from Taiwanese and Chinese handset manufacturers. We believe the company is betting on its new Blackberry 10 OS to be a potential game-changer for them.
The new operating system is based on QNX software, which is compatible with various open-source coding language, and also runs certain applications from its existing smartphone. The new software is designed to simplify the task of application and content developer.
The company is working with several application developers like Endomondo and Gameloft to develop content and applications for its upcoming smartphone. Research In Motion purchased Swedish user interface company Cascades in 2010, which develops high resolution applications.
Though Research In Motion is yet to come up with the device, it is expected to be launched as a touch screen device rather than it's very own Alpha Dev platform and is seen as a potential competitor to the iPhone. We believe although the company has tied up with several application developers and have nearly 70,000 applications, it still lags the iPhone with respect to apps -- iPhone has more than half a million apps.
According to research firm IDC, the company's market share has slipped to 6.7% from 13.6% a year ago. We believe this is the last throw of dice for Research In Motion, as another failure could be a massive blow for them.
We, therefore, maintain our long-term Underperform recommendation on Research In Motion. Currently, Research In Motion has a Zacks #4 Rank, implying a Sell rating over the short term.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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