Zacks Bull and Bear of the Day Highlights: Royal Caribbean, Western Union, Texas Instruments, Amazon and Qualcomm
CHICAGO, Nov. 20, 2012 /PRNewswire/ -- Zacks Equity Research highlights Royal Caribbean (NYSE:RCL) as the Bull of the Day and The Western Union Co. (NYSE:WU) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Texas Instruments (Nasdaq:TXN), Amazon (Nasdaq:AMZN) and Qualcomm (Nasdaq:QCOM).
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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:
Royal Caribbean (NYSE:RCL) is recovering at a steady pace from its close competitor Carnival's ship grounding in January this year and consequent dip in passenger confidence. Although the economic turmoil in Europe continues to nag the company, the extreme upheaval seems to have dispersed. The company's increased earnings guidance and third-quarter top- and bottom-line consensus beat are indicative of this fact.
The company also experienced a slight increase in on-board revenue in the third quarter and its cost containment efforts are also paying off. Relatively stabilized booking patterns, cost containment efforts, fuel conservation initiatives, increasing exposure to countries like China in order to tap the developing cruise travel market and the slowdown in industry capacity are positives for the shares.
Hence, we upgrade the recommendation from Neutral to Outperform. Our six-month target price of $40.00 per share equates to about 20.4x our estimate for 2012. The target price implies an expected return of 19.3% over that period.
We are downgrading our recommendation on The Western Union Co. (NYSE:WU) to Underperform from Neutral following its third quarter earnings release, in which the company trimmed its full-year 2012 earnings expectations. The company slashed its earnings guidance to a range of $1.60-$1.63 per share from a previous estimate of $1.68-$1.72 per share.
Moreover, stiff competition and a weak global economy is taking a toll on its performance. Western Union is facing compliance-related issues, particularly those linked to its Southwest Border agreement. It has also recently witnessed challenges in its core retail money transfer business in certain key markets.
The company is also facing strong competition from electronic channels of money transfer. On the other hand, Western Union is also facing management issues. Given a host of headwinds, we expect the stock to remain under pressure in the near term.
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Texas Instruments Cuts 1700 Jobs
TexasInstruments (Nasdaq:TXN), or "TI," plans to cut 1,700 jobs worldwide in order to reduce operational costs. This layoff is an attempt by the company to optimize its cost structure and concentrate on its wireless business for sustained growth.
Along with other unspecified operational changes, the company will incur total charges of approximately $325 million in the fourth quarter. These layoffs are expected to generate total annualized cost savings of around $450 million by the end of 2013.
Management is looking to restructure its businesses by focusing on its OMAP processors and wireless connectivity on embedded solutions like automobiles, industrial and other non-consumer markets, which have a long life cycle.
Though the company has made chips for devices such as Motorola Droid and Amazon's (Nasdaq:AMZN) Kindle Fire tablet, Qualcomm (Nasdaq:QCOM) and Samsung are far ahead in the race. The increasing competition from players such as these, as well as in-house development efforts of large customers has led TI to turn its focus away from the segment.
To continue its strong global growth momentum and increase its market share, TI needs to refine its cost structure. We believe the restructuring action will bring in stability and steady earnings growth in the near future. The longer-cycle businesses will also lend stability to its revenues and the more favorable competitive climate could help it generate stronger margins
Texas Instruments is one of the largest suppliers of analog and digital signal processing (DSP) integrated circuits. The company's compelling product line-up, increasing differentiation in its business, restructuring activities and lower-cost 300mm capacity should drive earnings in the longer term.
The restructuring announcement came a few days after TI reported decent third-quarter 2012 earnings. The company's earnings were up 27.2% sequentially and exceeded the Zacks Consensus Estimate by 17 cents or 37.8%.
Currently, Texas Instruments has a Zacks #3 Rank, which translates into a short-term Hold rating.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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