Zacks Bull and Bear of the Day Highlights: BorgWarner, Gentiva Health Services, Dell, Hewlett-Packard and Cisco Systems
CHICAGO, Sept. 14, 2011 /PRNewswire/ -- Zacks Equity Research highlights BorgWarner, Inc. (NYSE: BWA) as the Bull of the Day and Gentiva Health Services (Nasdaq: GTIV) as the Bear of the Day. In addition, Zacks Equity Research provides analysis Dell Inc. (Nasdaq: DELL), Hewlett-Packard Co. (NYSE: HPQ) and Cisco Systems Inc. (Nasdaq: CSCO).
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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:
BorgWarner, Inc. (NYSE: BWA) continues to focus on new product launches supported by new business opportunities and acquisitions. Demand for its fuel-efficient engines and transmissions have grown stronger due to more stringent government regulations. As a result, the company's revenues soared 28% in the second quarter of 2011, despite a drop in global vehicle production.
Furthermore, the company expects 25% to 28% growth in sales in 2011. Its profit significantly exceeded the Zacks Consensus Estimate by $0.14 per share during the reported quarter.
Our long-term Outperform recommendation on the stock indicates that it will perform better than the overall market. Our $82 target price, 18.6X our 2011 EPS estimate, reflects this view.
We have downgraded our recommendation on Gentiva Health Services (Nasdaq: GTIV) to Underperform, prompted by poor operating performance coupled with weakening financial position. The company's second-quarter earnings lagged the Zacks Consensus Estimate, on the back of high interest payments as well as increased expenses, resulting in a deteriorated cash position.
However, the strong growth in Hospice segment, driven by the Odyssey acquisition, led to a huge surge in revenue, which was offset by the rising costs. The company needs to engage in effective cost control, while continuing its current acquisition strategy.
Overall, the future outlook for Gentiva does not look very promising. Our six-month target price of $6.25 equates to 3.0x our earnings estimate for 2011. This price target implies an expected total negative return of 8.4% over that period.
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Dell Inks OEM, Storage Deals
Dell Inc. (Nasdaq: DELL) recently announced that a range of hardware including servers from Dell OEM Solutions will be deployed by Tripleplay Services, a leading provider of Internet Protocol television (OTC: IPTV), Video Streaming and Digital Signage solutions. Financial terms of the deal were not divulged.
Tripleplay Services' IP media solutions are designed to meet the needs of closed communities, including corporate, education, hospitality, health and residential accommodation.
Tripleplay's decision to migrate from Hewlett-Packard Co. (NYSE: HPQ) was largely on account of the lack of clarity regarding the latter's product roadmap, as well as the higher level of support promised by Dell OEM Solutions.
Dell's extensive product portfolio and comprehensive services help its OEM customers power their own solutions. OEMs use its products to efficiently design, develop and deliver their Dell-powered technologies. Tripleplay Services now joins the group of OEMs, with the ability to achieve economies of scale and reduce or eliminate complexities and overhead costs of bringing a product to market.
In another development, Dell was chosen to offer its Fluid Data solutions (or enterprise storage solution) to luxury jet service provider Flight Options. The solution was developed by Compellent Technologies, which was acquired by Dell in December 2010. The solution will help Flight Options improve the reliability, scalability, efficiency and automation of its virtualization efforts, at the same time reducing costs and Storage Area Network management time.
Over the past few months, Dell has been focusing on expanding its networking capabilities and enhancing its server and storage portfolio for a wider and more comprehensive enterprise offering. We believe this approach is exactly what Dell needs to compete against the likes of Cisco Systems Inc. (Nasdaq: CSCO) and Hewlett-Packard Co.
Though we understand that soft demand in the Consumer segment, a high debt level and stiff competition from technology majors will remain concerns, we feel that Dell will successfully capitalize on increased IT expenditures and show top-line improvement.
Currently, Dell has a short-term Hold recommendation, as indicated by the Zacks #3 Rank.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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