Zacks Bull and Bear of the Day Highlights: AutoNation, Johnson Controls, Microsoft, Apple and Google
CHICAGO, Sept. 11, 2012 /PRNewswire/ -- Zacks Equity Research highlights AutoNation, Inc. (NYSE:AN) as the Bull of the Day and Johnson Controls Inc. (NYSE:JCI) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Microsoft Corp. (Nasdaq:MSFT), 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:
AutoNation, Inc. (NYSE:AN) is the largest automotive retailer in U.S. The company s optimal brand and market mix is pulling new vehicle sales higher as the market revives. In the second quarter of 2012, the company's profits surged 35% to $0.66 per share, beating the Zacks Consensus Estimate by $0.07. Revenues of $3.9 billion were also higher than the Zacks Consensus Estimate of $3.7 billion.
The company's effort to expand its dealer network by investing in existing stores and service centers will help it outgrow peers. Further, recovery in auto sales and introduction of new products will boost the company's earnings.
As such, we have upgraded our recommendation to Outperform from Neutral and set a target price of $48.00. This is 19.4X our 2012 EPS estimate.
Johnson Controls Inc. (NYSE:JCI) is a leading supplier of automotive interiors, batteries and other control equipment. Despite posting 14% growth in earnings per share and 2% growth in revenues, the company failed to meet the Zacks Consensus Estimate in the third quarter of fiscal 2012. The company expects softness in the global markets, and a weak Euro would hamper its earnings.
We are also concerned about pricing pressure from OEMs and strong competition faced by the company. These have led us to downgrade our recommendation on the stock to Underperform from Neutral and set a target price of $25.00.
Our long-term Underperform recommendation on the stock indicates that it will perform below the market. Our $25.00 target price, 9.9X 2012 EPS, reflects this view.
Latest Posts on the Zacks Analyst Blog:
Microsoft on Hiring Spree in China
Microsoft Corp. (Nasdaq:MSFT) plans to hire more than 1,000 employees to boost its existing staff strength in China over the coming year. This expansion is an attempt by Microsoft to ramp up its research and development (R&D) efforts in the country, to better compete with Apple Inc. (Nasdaq:AAPL) and Google Inc. (Nasdaq:GOOG) in China's fast-growing mobile Internet market.
Microsoft said that the new employees would be spread across its R&D and marketing segments and customer service. Currently, the company spends around $500 million annually on research and development work in China. It plans to boost its R&D spend by 15% over the same time period. Additionally, Microsoft is building a large cloud computing center in Shanghai that will employ around 600 more employees.
China, one of the world's fastest growing economies, is replete with resources and is on course to becoming a central player in the global e-commerce industry. China's e-commerce market is growing at a double-digit percentage rate and nearly 400 million people in the country surf the Web using mobile phones and other devices.
According to the China Internet Network Information Center, China had an estimated 538 million online shoppers at the end of July, up 11% from the year-ago period. The segment that uses wireless devices grew twice as fast, rising 22% to 388 million.
In a bid to benefit from the growing Chinese market, Microsoft is increasing its investment in the country with new recruits, increasing research for local requirements and offering cloud computing services to its enterprise customers. The investment is expected to help promote Microsoft's Windows 8 mobile operating system, the upcoming release of Windows 8 (PC version) and Microsoft Office 2013.
Currently, Google's mobile operating system, Android dominates the Chinese smartphone market, with Apple's iPhone dominating in the higher end of the market. Both the technology companies, Apple and Google have already launched new products in the Chinese market, increasing their market share. Hence, to achieve the desired success and fight increasing competition, Microsoft has to make efforts to promote its latest offerings in an internet-savvy market like China.
We believe that Microsoft's current investments are supported by its strong balance sheet and expect these to drive the next growth phase, improving prospects of market share gains.
Microsoft Corp. has a Zacks #3 Rank, which implies a Hold rating in the short term (1-3 months).
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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