Science & Technology
Science and Technology
Science and Technology
Thu, February 12, 2009
Zacks Bull & Bear of the Day Highlights: American Tower, Marlin Business Services, RightNow Tech, Redhat and Progress Software
CHICAGO--([ BUSINESS WIRE ])--Zacks Equity Research picks American Tower Corp. (NYSE: [ AMT ]) as Bull of the Day and Marlin Business Services (Nasdaq: MRLN) as Bear of the Day. In addition, the analysts at Zacks Equity Research discuss the latest on RightNow Technologies, Inc. (Nasdaq: [ RNOW ]), Redhat (Nasdaq: [ RHAT ]) and Progress Software (Nasdaq: [ PRGS ]).
Full analysis of all these stocks is available at: [ http://at.zacks.com/?id=2678 ]
Bull of the Day
We maintain our Buy recommendation and the same valuation target for American Tower Corp. (NYSE: [ AMT ]), a leading operator of wireless communications towers in the US and other emerging markets, ahead of its fourth quarter 2008 financial results.
Overall performance has been driven by substantial demand for additional tower space to facilitate high-speed wireless data services and mobile video, along with emerging 3G technologies. Rental & management revenue, adjusted EBITDA, and free cash flow financial metrics remain favorable.
The company's new venture in the Indian markets will act as a significant long-run catalyst. Our long-term view regarding the wireless tower industry remains positive.
Bear of the Day
Marlin Business Services (Nasdaq: MRLN) is expected to release its 4Q08 results between February 13 and 23, 2009. Its 3Q08 results were a net loss of $0.08 per share, substantially below the consensus as well as our estimates. Credit quality deteriorated further during the quarter, with net charge-offs rising to 3.85% and the new originations declined 23.3% year-over-year.
We suspect the weakening economy will continue to impact the new originations, and the delinquencies will continue to rise at least through 1H09. MRLN recently filed to convert to a state chartered commercial bank, which will lower the cost of funding, however we do not expect any significant impact on the earnings in the current year.
Ahead of 4Q08 results, we are maintaining our Sell recommendation on the shares with a six-month target price of $3.60 per share.
Recent Analysis from the Analyst Blog
RightNow Tech Outperforms Ests
RightNow Technologies, Inc. (Nasdaq: [ RNOW ]) reported better-than-expected results for Q4:FY08 with slightly lower revenue and GAAP earnings exceeding our estimates. License revenues were slightly below our estimates with recurring revenues growing 9.9% year over year. Service revenues grew 46.2% year-over-year.
RNOW has recently switched to a subscription-based model, which appears to be paying dividends. The net gain for the quarter was $0.7 million or $0.02 per diluted share on a GAAP basis, which was higher than our estimates and a profit of $2 million or $0.06 per share on a pro-forma basis after backing out stock-based compensation expenses. This compares to a loss of $0.10 in the year-ago quarter and a loss of $0.04 in the prior quarter on a GAAP basis.
Forward guidance has led us to reduce our revenue estimates while also reducing our GAAP loss estimates in 2009. We are projecting Q1:FY09 revenue target of $37.0 million and now project revenues for the full-year 2009 to be $156 million. On a proforma basis, we now expect the company to post a profit of $5.91 million or $0.18 per share in FY09, and do not anticipate the company to reach quarterly break-even on a US GAAP basis before Q4 of 2009.
Although sell-side estimates are being revised upwards for several software companies, including Redhat (Nasdaq: [ RHAT ]) and Progress Software (Nasdaq: [ PRGS ]), reflecting higher-than-expected reported earnings and similar guidance, we are a bit cautious to be so bullish just as yet for the sector as a whole. Forward guidance for most software companies indicate declining revenues for 2009, while higher expected earnings are being pinned to cost-control measures mostly.
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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.
About Zacks Equity Research
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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