CHICAGO, March 23, 2011 /PRNewswire/ -- Zacks Equity Research highlights: School Specialty (Nasdaq: SCHS) as the Bull of the Day and Tower Group, Inc. (Nasdaq: TWGP) as the Bear of the Day. In addition, Zacks Equity Research provides analysis Broadcom Corporation (Nasdaq: BRCM), Qualcomm (Nasdaq: QCOM) and Analog Devices (NYSE: ADI).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Recently, School Specialty (Nasdaq: SCHS) has witnessed a rise in supplies orders. We believe that the company's improved pricing initiatives, product line-up, ecommerce systems and sales endeavors will help in regaining the lost market share from earlier.
Management also reaffirmed its revenue guidance of $735 million to $770 million and free cash flows in the range of $50 million to $60 million for fiscal 2011. The company leverages its strong distribution network to offer more than 75,000 items to approximately 91,000 schools in the U.S. This provides a competitive advantage to the company and bolsters its dominant position in the market.
We have a long-term Outperform recommendation on the stock. Our target price of $16.00 is a based on the P/CF multiple of 4.8X.
We are downgrading our recommendation on Tower Group, Inc. (Nasdaq: TWGP) to Underperform from Neutral as we think that a lower interest rate environment and higher expense ratio due OneBeacon's Personal Lines system integration, as well as other systems-related initiatives, will suppress earnings in the near term.
The company's fourth quarter 2010 earnings were ahead of the Zacks Consensus estimate, aided by a significant increase in Tower's Personal Lines business and its continued expansion into the Specialty Commercial business. However, a soft insurance market and exposure to catastrophe prone areas are some of the headwinds.
Our six-month target price of $21.00 equates to about 7.6x our earnings estimate for 2011. We view the $0.50 per share annual dividend as secure, implying a total negative return of about 9.1% over that period, which is consistent with our Underperform recommendation on the shares.
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Broadcom to Acquire Provigent
Leading chipmaker Broadcom Corporation (Nasdaq: BRCM) recently signed an agreement to acquire privately-held Provigent for approximately $313 million.
Provigent is a leading provider of innovative Systems-on-a-Chip (SoC) solutions for the broadband wireless transmission industry, offering highly integrated, high performance, mixed signal semiconductors for microwave backhaul systems. The company has offices in Israel and Santa Clara, California.
The transaction will close in the second quarter of 2011. Broadcom will pay the purchase price in cash, except that a portion attributable to certain unvested employee stock options will be paid in Broadcom restricted stock units.
Broadcom already provides one of the industry's broadest portfolios of Ethernet networking solutions for infrastructure, including mobile backhaul. With the addition of Provigent's engineering expertise in microwave radio products, Broadcom will be able to expand its footprint in the $5 billion microwave backhaul equipment business.
Provigent's portfolio addresses the ever-growing demand for high-capacity mobile backhaul systems that connect 2G, 3G and 4G (LTE and WiMAX) sites. Carriers are faced with the challenge of backhauling data from the cell sites to the core network to manage the robust growth in wireless traffic and transition to 4G networks. Microwave backhaul is the most prevalent type of technology used in the multi-billion dollar global mobile backhaul business.
Provigent is a privately-owned company. Its investors include prominent venture capital firms such as Sequoia Capital, Pitango Venture Capital, Lightspeed Venture Partners, Globespan Capital Partners, Ascend Technology Ventures, Magma Venture Partners and Delta Ventures. Other investors include Dr. Andrew Viterbi, co-founder of Qualcomm (Nasdaq: QCOM), and Mr. Ray Stata, Chairman & co-founder of Analog Devices (NYSE: ADI).
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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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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