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Altera, FTI Consulting, Microsoft, Coca-Cola and United Technologies

^{Published on 2010-07-22 14:11:35 - Market Wire}
 

CHICAGO--([ BUSINESS WIRE ])--[ Zacks Equity Research ] highlights: Altera (Nasdaq: [ ALTR ]) as the Bull of the Day and FTI Consulting (NYSE: [ FCN ]) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Microsoft Corp (Nasdaq: [ MSFT ]), Coca-Cola Co. (NYSE: [ KO ]) and United Technologies Corp. (NYSE: [ UTX ]).

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

Here is a synopsis of all five stocks:

[ Bull of the Day ]:

Altera (Nasdaq: [ ALTR ]) recently updated its outlook for the second quarter of 2010. The company expects revenues to grow around 10%-12% sequentially, at the high end of the previous guidance range of 8%-12%. The revised guidance implies revenue in the range of $442.5 million $450.6 million.

The growth in revenues will once again be driven by new products, as 65-nm FPGAs and especially 40-nm FPGAs continue to report solid growth. Top and bottom line estimates have been steadily increasing in the last three months. The current 2010 Zacks Consensus Estimate is $1.99, up by $0.39 in the last 90 days, driven by its strong earnings performance and upbeat guidance.

Hence, we upgrade the stock to Outperform from Neutral and set a target price of $33, which is derived by applying a target P/E multiple of 16.6x to our fiscal year 2010 EPS estimate.

[ Bear of the Day ]:

We are downgrading our recommendation on FTI Consulting (NYSE: [ FCN ]) to Underperform from Neutral as the company trimmed its fiscal year 2010 outlook. The revised outlook is due to dramatic deceleration expected in Corporate Finance and Restructuring, less-than expected recovery in Merger and Acquisition activity and the struggling Technology segment.

Additionally, progress in its other segments such as Economic Consulting, Strategic Communications and Forensic and Litigation Consulting businesses are slower than expected. Further, the near-term outlook remains cautious as demand environment for practices remains uncertain and seizing up of business in Europe.

Our six-month target price of $31.00 per share equates to about 12.0X our earnings estimate for 2010, implying a negative total return of about 7.8% over that period.

Latest Posts on the Zacks [ Analyst Blog ]:

Earnings Preview: Microsoft

Microsoft Corp (Nasdaq: [ MSFT ]) will report fourth quarter results on July 22, 2010. We expect the company to gain from strong business fundamentals, although growth will be tempered by currency issues related to the European crisis.

With another strong performance from the software giant, the current Zacks Consensus for the quarter is 46 cents. Surprisingly for a well followed stock, the analyst estimates for Microsoft are within a fairly narrow range of 42 cents to 53 cents. This range of estimates is reflected in a brief discussion of the pros and cons of the stock.

Prosa" The many positive catalysts as stated by analysts include the continued adoption of Windows 7 at consumer and enterprise customers, recent optimism of market research firms IDC and Gartner regarding PC shipments and continued technology deployment at data centers. Microsoft is expected to be a major beneficiary of cloud computing adoption and new product cycles are expected to drive robust growth going forward.

Consa" The major risk facing the company is currency-related. With such a large market share, Microsoft will very likely be impacted by the economic crisis in Europe . This has prompted the few downward revisions.

Microsoft has a track record of coming ahead of expectations, with a positive earnings surprise of 7.1% in the last quarter. Over the last four quarters, the companya™s earnings surprise has averaged an impressive 19.2%. They may not disappoint this time around either. But we will have to wait a couple of more days to find out.

Coca-Cola Q2 Profit Rises

Coca-Cola Co.a™s (NYSE: [ KO ]) second-quarter GAAP earnings grew a solid 16.3% to $2.4 billion from $2.0 billion in the year-ago quarter. Excluding special items, adjusted earnings per share came in at $1.06, which surpassed both the Zacks Consensus Estimate of $1.03 as well as the year-ago result of 92 cents per share.

The better-than-expected result was driven by volume growth and improved margin performance. Shares of Coca-Cola have gained 2.22% as of this blog post in Wednesday trading on the New York Stock Exchange.

Quarterly Details

During the quarter, Coca-Colaa™s net revenues rose 4.9% to $8.7 billion from $8.3 billion in the year-ago period. The growth was mainly attributable to a 5% increase in concentrate sales and a 2% positive impact from currency translation, partially offset by a negative 2% impact from deconsolidation of certain entities. Global unit case volume increased 5% in the quarter, driven by a 6% improvement in international unit case volume.

Geographically, the Eurasia & Africa division witnessed volume growth of 10% year-over-year led by India, which surged 22%, while Turkey and Russia grew by 10% and 6%, respectively. The Latin American segment volumes increased 7% driven by Brazil (13%) and Mexico (5%). The Pacific region recorded volume growth of 6%, led by Philippines and China. However, overall volume growth was partially offset by a modest 2% growth in North America coupled with a 1% decline in Europe.

Coca-Colaa™s gross profit during the quarter increased 6.8% year-over-year to $5.7 billion, while gross margin rose 120 basis points (bps) to 65.9% due to favorable currency translations and reduced commodity costs. Selling, general and administrative expenses, as a percentage of net revenues, declined 120 bps to 33.2%, mainly due management initiatives to improve productivity. Accordingly, operating income grew 13.3% year-over-year to $2.8 billion, while operating margin rose 240 bps to 31.9%.

UTX Outperforms Again

United Technologies Corp. (NYSE: [ UTX ]) recorded another strong quarterly performance, reporting earnings per share from continuing operations of $1.32, above the Zacks Consensus Estimate of $1.16. The year-over-year increase in the companya™s earnings and an improved margin was led by an increase in revenue and cost reduction efforts of the company.

Revenue

Total revenues in the quarter increased by 5% year over year to $13.9 billion, including organic growth of 4% and 1% from acquisitions. The companya™s revenue increased in most of its segments except Otis and Hamilton Sundstrand, where revenues declined by 3.9% and 1%, respectively. The companya™s highest revenue generating segment, Pratt & Whitney, reported an increase of 6%. Sikorsky revenues increased by 21.7% compared to the prior-year period.

Though the revenues in Otis and Hamilton Sundstrand declined during the quarter, new equipment orders in the segments increased by 12% (including favorable foreign exchange of 1%) and 7%, respectively. Orders for commercial HVAC increased by 6% (including favorable foreign exchange 1%) and for Carrier Transicold were up 39% organically. At Pratt & Whitney, demand for commercial spares for large engine increased by 8% year over year.

Margin

Segment operating margin increased by 160 basis points to 14.6% in comparison with the prior-year period. Adjusted segment operating margin, excluding restructuring and one-time items, increased 80 basis points to 15.7%.

Get the full analysis of all these stocks by going to [ http://at.zacks.com/?id=2649 ].

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