Zacks Bull and Bear of the Day Highlights: Altera, Masco Corporation, Oracle, Microsoft and Chipotle Mexican Grill

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Jun 24, 2011, 09:30 ET

CHICAGO, June 24, 2011 /PRNewswire/ -- Zacks Equity Research highlights: Altera Corp. (Nasdaq: ALTR) as the Bull of the Day and Masco Corporation (NYSE: MAS), as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Oracle Corp. (Nasdaq: ORCL), Microsoft (Nasdaq: MSFT) and Chipotle Mexican Grill Inc. (NYSE: CMG).

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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:

Bull of the Day:

Altera Corp. (Nasdaq: ALTR) continues to post solid growth, and we believe this growth will be sustainable in the long run. As expected, Altera faced a minor inventory adjustment and a temporary slowdown in the wireless segment during the first quarter. However, results topped our expectations.

Earnings estimates for 2011 increased by $0.09 after the first quarter report. The industry-leading 40-nanometer product execution and the company's ongoing efforts to improve operating efficiency remain the keys to long-term revenue growth.

We believe the company gained market share in 2010 from rival Xilinx Corporation. We find the stock attractive at current levels and, therefore, upgrade our recommendation to Outperform from Neutral.

Bear of the Day:

Masco Corporation (NYSE: MAS) is highly dependent on the U.S. housing industry. Falling prices have made homes a less lucrative investment to buyers, which reduces demand for Masco products. Rising prices of raw materials are also affecting margins to a large extent.

In addition, Masco is vulnerable to unfavorable currency fluctuations due to its extensive international presence. The company's high dependency on a few individual customers offers little room for margin expansion. In the most recent quarter, the company reported a loss of $0.05 per share, which was wider than the Zacks Consensus Estimate for a loss of $0.03.

We are maintaining our Underperform recommendation on shares of Masco. Our target price of $11 per share, 52.4x our 2011 EPS estimate, reflects this view.

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Oracle Earnings Typically Efficient

After the closing bell Thursday, Oracle Corp. (Nasdaq: ORCL) beat earnings and revenue estimates for the company's fiscal 4th quarter of 2011. Earnings of 75 cents per share easily beat the Zacks Consensus Estimate of 69 cents, and revenues in the quarter totaled $10.8 billion, topping the $10.76 billion expected.

A tidy but solid outperformance is customary for Oracle, and its 4th quarter positive earnings surprise of 8.7% is also a 26.3% improvement year over year. Analysts had largely steered clear of estimate revisions over the past 30 days -- again, quite typically -- and Oracle's earnings beat also topped The Street's "whisper number" of 72 cents per share.

Oracle posted 48% operating margin for the quarter. The company brought in $3.7 billion in new software licenses, $4 billion in support revenue and $1.2 billion in hardware -- all healthy numbers for the #2 database and enterprise software company behind Microsoft (Nasdaq: MSFT).

Guidance is normally given during the course of the earnings conference call, and this will likely push the near-term direction in ORCL shares. Oracle finished the normal trading day up 24 cents per share (+0.75%) to $32.44, but shares have taken a hit in the after-market. Currently, ORCL is down roughly $2 per share, or over 6%. We will take the time to analyze whether this is a reflection of fiscal 1st quarter guidance and/or related to the still-ongoing integration of Sun Microsystems, which Oracle purchased in January of last year.

Oracle Corp. currently has a Zacks #2 Rank (Buy) and is supported by a longer-term Outperform recommendation. The 6-month target price on Oracle is $41 per share.

Chipotle Shops Locally

Chipotle Mexican Grill Inc. (NYSE: CMG) has raised its target of using local produce to more than 10 million pounds for 2011 from about 5 million pounds set for 2010. Previous goals were 50.0% for 2010, 35.0% for 2009 and 25.0% for 2008. However, in 2010, the company purchased about 9 million pounds of local produce, which far exceeded its goal of 5 million.

The use of locally grown produce is a part of Chipotle's Food with Integrity program. Chipotle is the only national restaurant company to use fresh produce since 2008. Food with Integrity focuses on increasing the use of naturally raised pork, chicken, beef and organic produce.

The produce is generally procured from within 350 miles of its distribution centers as against 1,500 miles which is the average distance that food items in America cover before reaching a restaurant.

Chipotle primarily sources oregano, red onions, tomatoes, bell peppers, jalapenos and romaine lettuce from family owned farms. The company also gets some farming done in California for lemons, cilantro and avocados.

However, to ensure smooth supply to its 1,100 restaurants nationwide, Chipotle works within each region of the country. We believe the program also helps Chipotle to support farming communities around the country.

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.

About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

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