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Zacks Bull and Bear of the Day Highlights: National Semiconductor, Reddy Ice, Lionbridge, ArvinMeritor and Texas Instruments

^{Published on 2008-12-30 03:52:10, Last Modified on 2008-12-30 03:53:41 - Market Wire}
 

CHICAGO--([ BUSINESS WIRE ])--Zacks Equity Research picks National Semiconductor Corp. (NYSE: NSM) as Bull of the Day and Reddy Ice Holdings, Inc. (NYSE: [ FRZ ]) as Bear of the Day. In addition, the analysts at Zacks Equity Research discuss the latest on Lionbridge Technologies (Nasdaq: [ LIOX ]), ArvinMeritor (NYSE: [ ARM ]) and Texas Instruments, Inc. (NYSE: [ TXN ]).

Full analysis of all these stocks is available at: [ http://at.zacks.com/?id=2678 ]

Bull of the Day

National Semiconductor Corp. (NYSE: [ NSM ]) is an OEM [original equipment manufacturer] of analog and mixed-signal integrated circuits. November quarter revenue fell short of consensus expectations on both the top and bottom lines.

Forward guidance is for a revenue decline of -30% in the next quarter. New higher-margin products continue to grow in the mix, and management has refocused R&D [[ research and development ]] into areas that should sustain margins.

Although National has been negatively impacted by the recession, the [ business ] continues to exhibit the necessary ingredients for a strong comeback. We are reiterating our Buy rating on valuation considerations.

Bear of the Day

Headquartered in Dallas, TX, Reddy Ice Holdings, Inc. (NYSE: [ FRZ ]) is the largest manufacturer and distributor of packaged ice in the United States. The company sells its products primarily under the Reddy Ice® brand to approximately 82,000 consumer locations in 31 states and the District of Columbia.

Management is attempting to grow the top line through an aggressive acquisition strategy. However, due to adverse weather conditions in 2007, management twice lowered guidance. In 2008, management lowered guidance after reporting earnings each and every quarter. In September 2008, the Board suspended payment of the quarterly [ cash ] dividend.

In addition, the highly leveraged balance sheet, highly seasonal earnings, and the write-down of equity due to the impairment of assets are concerns. The stock is rated a Sell.

Recent Analysis from the Analyst Blog

Lionbridge Aims for Cost-Cutting

Lionbridge Technologies (Nasdaq: [ LIOX ]) is a leading provider of globalization, testing and application development services that enable customers to create and manage technology applications and enterprise content in various languages. The company reported weaker-than-expected revenues and swung to a GAAP net profit in the third quarter due to cost reduction and [ currency ] hedging initiatives as well as lower taxes.

The company has embarked on a cost-cutting initiative by transitioning to a virtual workforce, [ working from home ] by reducing office space lease especially in Europe. We are reducing our revenue estimates while projecting marginal profit on a U.S. GAAP basis for the full year 2008. We rate LIOX a Hold.

ArvinMeritor Tries to Avoid Crash

ArvinMeritor (NYSE: [ ARM ]) has a leading position in most of the markets it serves. Presently, the company is planning to spin off its Light Vehicle Systems (LVS) [ business ]. The company is undergoing dramatic cost reductions through its profit improvement initiative Performance Plus.

It is also expanding geographically and outsourcing to low-cost countries. However, difficult conditions in North American and West European automotive markets are primary concerns for the company. The downturn in the [ auto industry ] makes us apprehensive about the near-term prospects for auto suppliers such as ARM. Production cuts coupled with rising steel and fuel prices, lead us to rate the shares a Hold.

Texas Instruments Gets Played

Texas Instruments, Inc. (NYSE: [ TXN ]) is one of the largest suppliers of analog and DSP integrated circuits. September quarter results were below consensus expectations, on both the top and bottom lines. Forward guidance is for a revenue decline of 9-16%.

Management has stepped up its restructuring efforts in order to weather the difficult conditions. We continue to believe in the firm's long term potential, given its size, market position and product breadth. However, the near-term scenario continues to look dismal, as consumer spending remains soft. Management stated that wafer starts would continue to decline, the resultant drop in the utilization rate a negative for margins. We are reiterating our Hold rating on TXN [ shares ].

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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.

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