CHICAGO, July 23, 2012 /PRNewswire/ -- Zacks Equity Research highlights VistaPrint, Ltd. (Nasdaq: VPRT) as the Bull of the Day and Fastenal Company (Nasdaq: FAST) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onSprint Nextel Corp. (NYSE: S), Verzion Communications Inc. (NYSE: VZ) and AT&T (NYSE: T).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
VistaPrint, Ltd.'s (Nasdaq: VPRT) earnings for the third quarter of fiscal 2012 were well ahead of the Zacks Consensus Estimate, driven primarily by higher-than-expected revenue growth. The company is expanding inorganically with the acquisition of Dutch photo book company Albumprinter & Webs, as well as forming strategic partnerships with companies like Staples.
Apart from inorganic growth, the company's long- term organic growth guidance looks commendable. Also, the company is gradually emerging as an international company. Although VistaPrint s 2012 performance could be challenging due to a few planned investments, which could weigh on its bottom line, we believe this downside risk is already reflected on the current share price.
Hence, we upgrade the stock from a Neutral to Outperform recommendation. Our six-month target price of $39.00 equates to 37.1x our earnings estimate for fiscal 2012. This price target implies an expected total return of around 19.0% over that period.
Though Fastenal Company's (Nasdaq: FAST) second quarter 2012 earnings of $0.38 beat the Zacks Consensus Estimate by a penny, total revenue was below the Zacks Consensus Estimate, mainly due to a slowdown in sales to manufacturing customers. Daily sales growth rates declined sharply in the quarter due to sluggish end-markets as well as foreign currency headwinds.
The sequential change in daily sales for the first half of 2012 was also below historical averages, highlighting the rising uncertainty in the growth outlook of Fastenal's end markets. Moreover, Fastenal's pathway to profit strategy has failed to achieve its desired results.
Other than that, the company's strategy of new store openings significantly hurt near-term profitability due to the start-up costs involved in opening a new store. These factors combined with margin pressures due to rising cost of fuel has forced us to downgrade our recommendation on shares of Fastenal from Neutral to Underperform and set a target price of $41.00.
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Sprint Joins LTE Bandwagon
As per its previously announced schedule, the third-largest wireless carrier in the U.S., Sprint Nextel Corp. (NYSE: S) recently launched its high-speed 4G Long Term Evolution (LTE) services in five markets - Atlanta, Dallas, Houston, Kansas City and San Antonio, along with 11 other towns located around these five markets.
Higher proliferation of smartphones and tablets has increased the demand for much faster network services. So, in order to meet the increasing subscriber demand as well as to compete with early movers Verzion Communications Inc. (NYSE: VZ) and AT&T (NYSE: T), Sprint came up with its first 4G LTE services in the above-mentioned markets.
Sprint plans to successfully deploy its LTE services to cover its nationwide network by the end of 2013, encompassing more than 250 million customers with 22,000 cell sites. The successful deployment will not only allow the company to sideline its existing WiMax Network but will also help it to reduce cost by installing fewer cell sites.
The development is a part of Sprint's network upgrade plan, Network Vision, which aims to combine various 3G and 4G technologies into one seamless network, hence leading to efficient use of capital, reduction of cell sites, the elimination of dual networks, backhaul efficiencies, reduced churn, lower roaming charges and energy cost savings.
On the flipside, we believe that increased investment for the deployment of LTE networks across the U.S. by 2013 will lead to dilution of Sprint's free cash flow for the next two years. However, liquidity is expected to improve once LTE is fully deployed.
We are maintaining our long-term Neutral recommendation on Sprint. For the short term (1–3 months), the stock retains a Zacks #3 (Hold) Rank.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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