Zacks Bull and Bear of the Day Highlights: Las Vegas Sands, CRA International, Activision Blizzard, Electronic Arts and Take-Two Interactive Software
CHICAGO, May 18, 2012 /PRNewswire/ -- Zacks Equity Research highlights Las Vegas Sands Corp. (NYSE:LVS) as the Bull of the Day and CRA International (Nasdaq:CRAI) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Activision Blizzard Inc. (Nasdaq:ATVI), Electronic Arts Inc. (Nasdaq:EA) and Take-Two Interactive Software Inc. (Nasdaq:TTWO).
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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:
Las Vegas Sands Corp.'s (NYSE:LVS) first-quarter results were robust with an industry-wide record of $1 billion EBITDA and adjusted earnings up 89.2% year over year. The first-quarter earnings also surpassed the Zacks Consensus Estimate by $0.10.
The company enjoys a revenue compound annual growth rate of over 20%. With the gradual recovery in global economy, the company is experiencing an increase in demand. Macao and Singapore operations continue to witness strong momentum. The business at Las Vegas, which was worst hit due to the economic slowdown, is also steadily improving.
Moreover, we view the company's Sand Cotai Central project as a long-term catalyst. Additionally, the company remains focused on enhancing shareholder value. Thus, we expect the company's earnings to increase going forward. Hence, we upgrade the stock from Neutral to Outperform.
CRA International's (Nasdaq:CRAI) first quarter 2012 results were discouraging. Earnings lagged the Zacks Consensus Estimate significantly, owing to the drastically poor performance of its management consulting business. As a result, all key-line items experienced a downside.
The performance of management consulting suffered because of delays in several projects, particularly in Europe. Although management reaffirmed its outlook for 2012, based on first quarter results, we remain skeptical about its target.
Moreover, we are concerned about the ongoing economic uncertainty in Europe, cautious spending by clients, stiff competition and currency fluctuations. Hence, we downgrade the stock from Neutral to Underperform.
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Activision, EA Resolve Issues
Activision Blizzard Inc. (Nasdaq:ATVI) and Electronic Arts Inc. (Nasdaq:EA) have reached an amicable settlement with regard to their on-going legal dispute, according to Reuters. Though the terms of settlement related to contract interference claims were not disclosed, the $400 million suit that Activision filed against EA will now be set aside.
In March last year, Activision brought charges against EA alleging that the latter had secretly negotiated with two of the formers' employees who were still officially under contract with Activision. The employees happened to be Jason West and Vince Zampella, the founders of Infinity Ward, famous for the Call of Duty series.
Activision alleged that in 2009 the two developers had hired agents and secretly met and negotiated with EA executives, who were still working at Activision. Activision had complained that EA, aided by Creative Artists Agency, allegedly flew West and Zampella by a private jet from Southern California to San Francisco to attend a barbecue at Electronic Arts CEO John Riccietello's house, in August 2009.
We believe that the legal battle would not have benefited any of the parties, as this kind of trial takse a long time to yield any results. Thus, both the companies can now concentrate on the business they do best -- produce games.
Despite the settlement with EA, Activision will still have to deal with another $36 million lawsuit that was filed by West and Zampella against Activision, alleging that the company terminated them so that it could avoid making royalty payments on Call of Duty: Modern Warfare 2.
The trial for this lawsuit is scheduled on May 29, 2012. Interestingly, Activision in a regulatory filing revealed that its claim damages would amount to $1 billion, a sharp increase versus the original claim of $36 million.
Activision would definitely seek to dismiss the claims when it goes on trial. However, its filing indicates that it expects to part with the cash. To make matters worse, Activision's first quarter 2012 performance was a big disappointment, as revenue and income both fell on year-over-year basis.
Notably, in March this year, a California Superior Court Judge dismissed a fraudulent-inducement claim by West and Zampella against Activsion, but agreed to conduct a full hearing on the claim for promissory fraud. Further proceedings in the case will be watched closely by investors due to the sheer amount of the claim damages, and any negative ruling would act as a headwind for the company.
Moreover, the softness in the video game industry and Activision's limited presence in the social gaming market coupled with significant competition from EA and Take-Two Interactive Software Inc. (Nasdaq:TTWO) keep us Neutral on the stock over the long term.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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