Zacks Bull and Bear of the Day Highlights: International Paper, Hhgregg, NII Holdings, America Movile S.A.B. and Telefonica S.A.
CHICAGO, Jan. 17, 2012 /PRNewswire/ -- Zacks Equity Research highlights International Paper Co. (NYSE: IP) as the Bull of the Day and Hhgregg, Inc. (NYSE: HGG) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on NII Holdings Inc. (Nasdaq: NIHD),America Movile S.A.B. (NYSE: AMX) and Telefonica S.A. (NYSE: TEF).
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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:
International Paper Co.'s (NYSE: IP) third quarter EPS of $0.92 beat the Zacks Consensus Estimate. The company continues with its merger and acquisition strategy to strengthen its businesses. The merger with Temple-Inland will increase its share of the North American corrugated-packaging market from 27% to 40% and will be accretive to EPS in the first year.
Further, International Paper's acquisition of a 75% stake in Andhra Pradesh Paper Mills will help capitalize on the burgeoning demand for paper and packaging products in India. Furthermore, through its joint ventures, International Paper has significant projects underway in Russia and China. These will help the company sustain its earnings growth.
We expect International Paper to continue utilizing its sound cash flow by investing in capital projects, acquisitions and reducing its total debt. Thus, we have upgraded our recommendation from Neutral to Outperform with a target price of $38.00.
Hhgregg, Inc. (NYSE: HGG) has recently expressed its apprehension with regard to its third-quarter 2012 earnings to decline to approximately $0.60 per share, from the prior-year quarter of $0.66. The estimate slid on the back of lower than expected margins in the video category owing to the promotional activities across all screen sizes.
Hhgregg also expects advertising expenses to escalate due to the recent initiatives taken up to increase its market share in the appliance and home office categories. In addition, Hhgregg has also launched a mobile product offering to enhance its customers shopping experience. The preliminary third quarter 2012 results also led to a downward revision in fiscal 2012 earnings in the range of $1.05 to $1.15, compared with the previous guidance of $1.26 to $1.41.
Going forward, we expect net sales and operating margins to remain muted owing to the seasonal shopping patterns, rising costs and competitive pressures. Moreover, weakness across the consumer electronics and appliances industry may turn out to be serious headwinds to the top-line. We thus maintain our Underperform rating on the stock.
Latest Posts on the Zacks Analyst Blog:
NII Holdings to Underperform
We downgrade our recommendation on NII Holdings Inc. (Nasdaq: NIHD) to Underperform backed by our assessment that the company's nightmare will continue in the near future. NII Holdings reported dismal financial results for the third quarter of 2011. Both the top line and bottom line were well below the Zacks Consensus Estimates.In synergy with the somber results, management slashed its fiscal 2011 financial outlook mainly driven by volatile macro-economic condition coupled with significant depreciation of several Latin American currencies in comparison with U.S. dollars.
During the previous quarter, net customer additions declined. NII Holdings added 433,300 net new subscribers, down 0.6% year over year.Moreover,quarterly costs per gross subscriber addition were $335 compared with $267 in the year-ago quarter, indicating a rise in customer acquisition cost. Moreover, stiff competitive scenarios in Latin American markets are other impediments for such reduced outlook. We believe intensifying competition and increased promotional expenses may reduce the company's near-term growth opportunity.
Key competitors are aggressively deploying next-generation wireless technologies in major Latin American markets. For example, America Movile S.A.B. (NYSE: AMX) has completed rolling out 3G services in Mexico and the major cities of Brazil. It also has 60% 3G penetration in Argentina, Paraguay and Uruguay.
Telefonica S.A. (NYSE: TEF) rolled out 3G services in Latin America and currently commands a major share of the Brazilian 3G market. Telefonica also completed deployment of 3G networking in 8 Mexican and Venezuelan cities.NII Holdings is far behind other carriers in terms of 3G networks. NII Holdings lacks market diversification strategy as it focuses only on Latin American region. Brazil solely contributes over 50% of the company's revenue. So any change in Brazilian economy or regulation will hugely affect the company's business.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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