Zacks Bull and Bear of the Day Highlights: Estee Lauder Companies, Canadian Solar, Adobe Systems, Apple and Microsoft
CHICAGO, Dec. 15, 2011 /PRNewswire/ -- Zacks Equity Research highlights Estee Lauder Companies (NYSE: EL) as the Bull of the Day and Canadian Solar, Inc. (Nasdaq: CSIQ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Adobe Systems Inc. (Nasdaq: ADBE), Apple Inc. (Nasdaq: APPL) and Microsoft Corp. (Nasdaq: MSFT).
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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:
Estee Lauder Companies' (NYSE: EL) first-quarter 2012 earnings of $1.41 per share surpassed both the Zacks Consensus Estimate as well as the year-ago result by 19.5% and 45.0%, respectively. The buoyant purchasing power of the affluent class who shop for products from cosmetics to big-ticket items also fueled strong sales in the luxury sector.
While skin care segment thrived during the quarter, travel retail gave a boost to the quarterly sales of the company. Successful recent launches coupled with unparallel innovations backed the Estee Lauder's strong business in the quarter. The company also raised its full-year earnings guidance by 25 cents from its previous estimates of $4.20 per share provided during August 2011.
Management further boosted dividend by 40% and declared a 2:1 stock split. Our six-month target price of $129.00 per share equates to about 28.4x of earnings estimate for 2012. Currently, we upgrade our long-term recommendation from Neutral to Outperform.
Canadian Solar, Inc. - ADS (Nasdaq: CSIQ) is a low cost, vertically-integrated solar module producer with predominantly China-based manufacturing assets. In the near-term, fortunes look to be impacted by the industry-wide oversupply glut, leading to sharply falling average selling prices, tepid module demand in Europe, and rising competition in the market.
Furthermore, adjusted loss per ADS of $1.24 in its third quarter of 2011 was way below the Zacks Consensus Estimate of $0.51 loss. Given the industry wide high inventory level, we do not foresee any short-term improvement in margins of the company. So we advise investors to exit from the stock for now and look for a favorable entry point in the future.
Canadian Solar is also undergoing a review by the International Trade Commission due to a complaint by Westinghouse Solar Inc. In the complaint Westinghouse Solar accused Canadian Solar of patent rights infringement.
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Earnings Preview: Adobe Systems
Adobe Systems Inc. (Nasdaq: ADBE) is scheduled to announce its fourth quarter fiscal 2011 results on December 15, 2011 and we notice no movement in analyst estimates.
Fourth Quarter Guidance
Adobe expects revenue to come in at around $1.075 billion to $1.125 billion (up 6.1% to 11.0% sequentially). The Zacks Consensus Estimate is pegged at $1.085 million.
The company has projected GAAP operating margin of 26.5–29.5%, non operating expense of $17–$21 million, a tax rate of 22% and share count of 497– 499 million, yielding a GAAP EPS of 41–50 cents. The Zacks Consensus Estimate is currently pegged at 50 cents per share, up a couple of cents since the company last reported. The surprise percentage has been improving over the past three quarters, which could be the reason for analysts raising estimates to the high end of the guided range
Agreement of Analysts
None of the 10 analysts covering the stock revised their estimates in the last 30 days. Even for fiscal 2011, there was no revision in the last 30 days.
Most of the analysts covering the stock expect revenue to come in line with the Street consensus of $1.090 million. They expect EPS to come in at $0.61, slightly ahead of the Street consensus of $0.60 on continued cost control measures taken by management.
However, the analysts are cautious about the foreign exchange headwinds and the high exposure of the company in Europe, which is stricken by a gloomy macroeconomic environment.
Magnitude of Estimate Revisions
For the fourth quarter, there was no change to the Zacks Consensus Estimate in the past 30 days. But it dropped a penny to 49 cents in the past ninety days.
For fiscal 2011, the Zacks Consensus Estimate dropped a penny to $1.84 in the past ninety days.
Recommendation
We believe Adobe will come out with decent fourth quarter results owing to its cost cutting efforts and improved execution. The company's compelling product lines, continued innovation and improving product portfolio will provide a competitive edge.
We believe that the ramp up of Creative Suite 6 and solid initial adoption of Creative Cloud could be potential catalysts.
Recently, Adobe signed a definitive agreement to acquire Efficient Frontier. The proposed acquisition will enhance the company's Digital Marketing suite by adding optimization capabilities for search and display advertising while accelerating its entry into social advertising.
However, we believe that unfavorable foreign currency fluctuations, European exposure and strong competition from Apple Inc. (Nasdaq: APPL) and Microsoft Corp. (Nasdaq: MSFT) could affect results in the upcoming quarter.
Adobe shares currently have a Zacks Rank of #4, implying a short-term Sell recommendation.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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