CHICAGO, April 23, 2013 /PRNewswire/ -- Zacks Equity Research highlights Conn's (Nasdaq:CONN) as the Bull of the Day and Rackspace Hosting (NYSE:RAX) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Abbott Laboratories (NYSE:ABT), AbbVie (NYSE:ABBV) and Nuvasive (Nasdaq:NUVA).
If you've watched the 3-year decline of "big box" appliance and electronics retailer Best Buy, you may have thought that this is a business model to stay away from. I certainly thought so until I discovered Conn's (Nasdaq:CONN ), a family-built retailer with over 50 stores in Texas, 6 in Louisiana, and newer footholds in Oklahoma City, Albuquerque, and Tucson.
Conn's roots go back to 1890 where it started life as a plumbing company in Beaumont, Texas. In 1934, Carroll Wayne Conn, Sr bought the company and within a few years began selling refrigerators and gas ranges. He didn't become the Sam Walton of appliances, but his legacy built a brand that Texans have come to know and trust.
Now they sell just about everything durable for the home, including entertainment electronics, furniture, mattresses and lawn and garden equipment -- and they've built a loyal customer base doing it with a focus on service and satisfaction. The company was also an early innovator of the in-house financing model in the 1960s.
Sales and Profits Grow With Store Build-Out
Since coming public nearly a decade ago, Conn's has continued to expand, with quarterly revenues averaging over $200 million for the past 5 years. The recent Q4FY2013 sales result topped $250 million for the first time since 2008.
This sales growth is propelled by expansion with new locations built around their HomePlus store concept. Pricing power and margin improvement keep their earnings expanding as well.
The company declared strong results on Apr 3, 2013, with EPS of 54 cents a share that surged 58.8% from the 34 cents earned in the year-ago quarter. Comparable-store sales for the quarter climbed 7%.
The frontiers of technology are full of great new innovations that quickly become commodities. The so-called cloud revolution for data storage and software application usage may soon have its own "commodity moment" for firms competing to win and sustain business.
And one company currently experiencing the pain of pricing pressures is Rackspace Hosting (NYSE:RAX), a leading provider of hosting services in which the company provides IT infrastructure and management for customers' Websites, applications, and other computing needs through its data centers and cloud services.
RAX slipped to Zacks Rank #4 (Sell) and then a Rank #5 (Strong Sell) last week after analysts continued to lower earnings estimates. Full year 2013 profit projections have been taken down by over 11% in the past two months since the company's last quarterly report on February 12.
The impetus for the downward revisions has been Rackspace's announced pricing changes for certain cloud services, including a 33% reduction in the price for cloud bandwidth/CDN services and the introduction of tiered pricing for its object storage service that equates to volume discounts.
Abbott Laboratories (NYSE:ABT) recently announced that the company has gained approval from the US Food and Drug Administration (FDA) for its TECNIS Toric 1-Piece intraocular lens (IOL). The company gained approval for treating cataract patients with pre-existing corneal astigmatism.
Abbott Labs has launched the product following the approval.
Corneal astigmatism results in blurred vision as it prevents light rays from focusing clearly on the retina. We note that the new product from Abbott Labs is superior to conventional IOLs since it has the ability to correct the loss of focus due to pre-existing corneal astigmatism of one diopter or greater.
As per Abbott Labs, the number of surgeries is expected to grow nearly 3% each year driven by an aging US population which should fuel patient demand for improved, precise visual outcomes and independence from glasses.
We note that cataract sales accounted for 60% of the company's total medical optics in the first quarter of 2013 driven by solid growth of its TECNIS brand of intraocular lenses. In particular, growth was strong in emerging markets. Meanwhile, sales of Medical Optics were down 0.6% in the first quarter of 2013 as growth in cataract sales was partially offset by a modest decline in refractive sales driven by continued soft market conditions.
Going forward, Abbott Labs expects to launch several products in the cataract segment such as TECNIS Preloaded IOLs in 2013. In addition, the Japanese launch of Tecnis OptiBlue IOL in the first quarter of 2013 should further propel growth of cataract sales.
Abbott Labs expects low-single digit sales growth in its vision care business in the second quarter of 2013 (excluding the impact of foreign exchange).
We remind investors that in Jan 2013, Abbott Labs separated its research-based pharmaceuticals business by creating a new company – AbbVie (NYSE:ABBV).
Following the move, Abbott Labs became a diversified medical products company with a presence in branded generic pharmaceutical, devices, diagnostic and nutritional businesses.
Abbott intends to increase its presence in emerging markets, which provide a substantial opportunity for growth, given the rise in middle-class income and aging population. The diversification should enable Abbott to penetrate these markets and capture market share.
Abbott Labs currently carries a Zacks Rank #3 (Hold). As of now, Nuvasive (Nasdaq:NUVA) looks attractive with a Zacks Rank #1 (Strong Buy).
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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