Zacks Bull and Bear of the Day Highlights: Hibbett Sports, BP, Citigroup, JPMorgan and VeriSign

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Jul 17, 2012, 09:30 ET

CHICAGO, July 17, 2012 /PRNewswire/ -- Zacks Equity Research highlights Hibbett Sports Inc. (Nasdaq:HIBB) as the Bull of the Day and BP Plc (NYSE:BP) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onCitigroup (NYSE:C), JPMorgan (NYSE:JPM) and VeriSign Inc. (Nasdaq:VRSN).

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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:

Backed by double-digit sales growth along with operational efficiencies, Hibbett Sports Inc.'s (Nasdaq:HIBB) earnings of $0.98 per share for first-quarter fiscal 2013 surged 29% from the prior-year quarter, beating the Zacks Consensus Estimate of $0.92. Buoyed by better-than-expected results, continued sales momentum along with improved cost management and margins, the company raised its expectations for fiscal 2013.

The company now forecasts earnings in the range of $2.50 - $2.65 per share, up from $2.35 - $2.55 forecasted earlier. Management also remains committed of expanding its store network by 55 to 60 new stores in fiscal 2013. Moreover, Hibbett's sharp focus on mid-sized and smaller markets and strategic mix of branded as well as localized merchandise provide an edge over its rivals.

Hibbett has a healthy balance sheet with no debt. Currently, we are maintaining a long-term Outperform recommendation on the stock.

Bear of the Day:

We are downgrading our recommendation on BP Plc (NYSE:BP) to Underperform from Neutral. The company saw lackluster performance in both Upstream and Downstream segments in the most recent quarter. In particular, the Gulf of Mexico drilling moratorium of 2010 is still hurting BP's production, which registered a 6% year-over-year decline.

The company's guidance of lower production and higher costs for the upcoming quarter also keeps us wary. Output for 2012 is likely to be on par with 2011 levels. Additionally, BP faces headwinds from a number of global macro issues, which include sovereign debt risks, defaults on sovereign credits and changes in U.S. monetary, fiscal and tax policies.

Based on the above mentioned headwinds, we are downgrading our recommendation on BP. Our $37 target price represents 6.3x 2012 EPADS.

Latest Posts on the Zacks Analyst Blog:

More Signs of Negative Momentum

This morning's weaker-than-expected Retail Sales data provides further evidence of negative momentum in the economy. The reading will likely keep the market's hopes of additional Fed support alive and will further enhance the spotlight on Bernanke's Senate testimony on Tuesday. Partly offsetting the negative Retail Sales report is the modestly positive Empire State manufacturing survey for July and the better-than-expected earnings report from Citigroup (NYSE:C) this morning.

The June Retail Sales report showed the third consecutive monthly decline in this key measure of consumer spending. The measure was weaker still after excluding automobile and gasoline sales, which can cause unusual swings in this non-inflation-adjusted measure of consumer spending. The Retail Sales report is admittedly not a perfect proxy for 'real' consumer spending, since this non-inflation adjusted measure only includes 'goods' sales at retail establishments and leaves out the much larger consumer outlays on 'services.'

The anemic jobs growth of the last few months is likely a contributor to this soft spending pattern, but the hope was the recent drop in gasoline prices (which showed up in the 'headline' decline in today's data) would help spur spending elsewhere. Many expect the Fed to play its part by announcing additional support in next month's FOMC meeting, and will be looking for signs of that in Bernanke's Senate testimony tomorrow.

We are also getting into the thick of the second quarter earnings season, with almost a fifth of the S&P 500 companies reporting results this week. The positive earnings report from Citigroup this morning and JPMorgan (NYSE:JPM) on Friday aside, the early reports have set a downbeat tone for this earnings season. Total earnings for the 32 companies that have reported results already are flat from the year-earlier period, with a median surprise of a very weak 1.1%.

These same companies did much better in the first quarter, with earnings growth of 4.9% and a median surprise of 3.6%. But given the small number of reports thus far, it's perhaps a bit too early to write-off this earnings season. With reports from almost a quarter of all S&P 500 companies by the end of this week, we will then have a good enough sample size to judge the quality of the second quarter earnings season.

Internet Adds More Domain Names

According to the latest Domain Name Industry Brief published by VeriSign Inc. (Nasdaq:VRSN), approximately seven million names were added to the Internet in the first quarter of 2012. Therefore, the total number of registered domain names increased to approximately 233 million on a worldwide basis.

The addition of 7.5 million domain names represents a 3.3% sequential growth rate. Registrations have grown by more than 23 million or 11%, since the first quarter of 2011. Meanwhile, registrations of .com and .net totaled 8.9 million during the quarter, up 7.7% year over year. The .com/.net renewal rate for the first quarter was 73.9%, up from 73.5% for the fourth quarter.

The .com and .net TLDs reached a combined total of 116.7 million names, up 2.5% sequentially and 8.1% year over year.

VeriSign began tracking the ccTLDs launched by ICANN through the IDN ccTLD Fast Track Process. This new fast track process enabled countries and territories that use languages based on non-Latin scripts offer users domain names in non-Latin characters. Hence, the additional tracking led to VeriSign gaining an additional 808,967 ccLTD in the first quarter of 2012.

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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