Science & Technology
Science and Technology
Science and Technology
Mon, December 29, 2008 Zacks Analyst Blog Highlights: Research in Motion, Ness Technologies, J.C. Penny, Best Buy and Macys
CHICAGO--([ BUSINESS WIRE ])--Zacks Equity Research picks Research in Motion (Nasdaq: RIMM) as Bull of the Day and Ness Technologies (Nasdaq: NSTC) as Bear of the Day. In addition, the analysts at Zacks Equity Research discuss the latest on J.C. Penney (NYSE: JCP), Best Buy (NYSE: BBY), and Macy's (NYSE: M).
Full analysis of all these stocks is available at: [ http://at.zacks.com/?id=2678 ]
Bull of the Day
Research in Motion's (Nasdaq: RIMM) management provided an encouraging fourth quarter financial outlook as new high-end handsets are experiencing significant market traction. We expect the smart-phone device market to gain momentum should economic conditions improve and as demand for portable mobile access remains firm on a global market basis. In addition, the company has a healthy financial position with net cash of nearly $2.5 billion.
As a cautionary note, declining gross margins due to new product availability, a highly challenging economic environment, and increasing competition are issues to consider.
Based on our review, we maintain our Buy recommendation for RIMM for its strong market position with a reduced valuation target.
Bear of the Day
Ness Technologies (Nasdaq: NSTC) is a small player in the IT services market. The company has undergone significant changes over the past year, with turnover in its senior management team and choppy results during 2007.
Ness posted lower-than-expected 3Q08 results, hurt mainly by a slowdown at its U.S. financial services and NessPRO software distribution businesses. Moreover, challenges remain with an uncertain global economy and volatile equity market.
We believe there is risk that the company will not be able to reach its target and we have low confidence on the company's current estimates. We are lowering our estimates for 2008 and 2009, and maintain our Sell rating on NSTC shares with our six-month target price of $4.00
Recent Analysis from the Analyst Blog
Holiday Shopping Disappointing
Preliminary retail sales reports for the holidays are in.
According to SpendingPulse, a unit of MasterCard, total retail sales (excluding autos) declined 8% year-over-year for the period Dec 1 through 24.
More troubling was the report issued by ShopperTrak. It reported that customer visits to retailers declined 24% (the largest drop ever) last weekend versus last year. Keep in mind that the weekend before Christmas is usually the busiest shopping time of the year, as shoppers look for last-minute gifts. ShopperTrak also estimated that retails sales for Dec 19-21 fell 5.3%.
Our take is that sales trends have deteriorated from November into December. Falling gasoline prices are not enticing consumers to consume more. In light of a weak economy, higher unemployment, and tighter credit markets, consumers are choosing to spend less and save more. Those who are spending money in retail stores are buying heavily discounted items at name brand stores, trading down to discounters/liquidators, and only buying what is needed.
The biggest surprise during the holidays is that the huge decline in gasoline did not spur even a slight up tick in spending. Instead, the savings at the pump has been saved or used to pay down existing debt. A higher savings rate is a long-term positive for the economy. Unfortunately, the transition from borrowing and spending to saving is going to a great deal pressure on retailers in the near term. As a result, retailers including J.C. Penney (NYSE: JCP), Best Buy (NYSE: BBY), and Macy's (NYSE: M) are offering huge post-holiday discounts beginning today to clear out inventories.
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About the Bull and Bear of the Day
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.
About the Analyst Blog
Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.
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Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
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