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For Immediate Release
Chicago, IL – March 12, 2012 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Google Inc. ( (GOOG - Analyst Report), Apple Inc ( (AAPL - Analyst Report), eBay ( (EBAY - Analyst Report), Laboratory Corporation of America Holdings ( (LH - Analyst Report) and Quest Diagnostics ( (DGX - Analyst Report).
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Here are highlights from Friday’s Analyst Blog:
Google Play Competes with Apple
Google Inc. ( (GOOG - Analyst Report) is doing all it can to build its position in the smartphone segment. What started out as a need to protect search market share has grown into a full-fledged war to gain supremacy in the space. Google’s Android is not doing too bad, giving number one rival Apple Inc ( (AAPL - Analyst Report) a run for its money.
But the company was soon to realize that a good OS is not all that it takes to keep people stuck on its Android-run devices. What actually creates sticky customers is software development around the OS, which increases the convenience and enjoyment of using the device.
The problem with Android has been that its app sales have not been up to expectations. Company officials believe that one of the reasons for this was the complicated payment system. So Google is now taking steps to simplify the system.
It recently announced Google Play, which is similar to Apple’s app store, enabling all forms of digital entertainment download and purchase. While developers may not welcome Google’s more expensive Digital Wallet as the payment system, the company has made certain that there would be a single payment system on the platform.
This effectively blocks out eBay’s ( (EBAY - Analyst Report) Paypal, as well as Zong, which was also recently acquired by eBay. Although eBay could be put out, they probably can’t do much about it, since Apple has been using its own payment system from day one and no one has complained. So if Google does the same thing, it should also not be penalized.
Of course, Google has been caught on the foot a number of times and regulatory interference should not be ruled out. Google for its part, continues to support its action, saying that it would benefit both developers and consumers. Developers are likely to see increased sales, since the convenience of the system could help draw more customers. At the same time, customers are likely to find the system more convenient, so are likely to generate more sales.
We think this is all good news for Google and we see the company gradually narrowing the gap between itself and Apple.
We currently have a Zacks Rank of #3 on Google shares, implying a Hold rating over the next 1-3 months.
LabCorp to Make Case at Miami Con
Laboratory Corporation of America Holdings ( (LH - Analyst Report) will be present at the upcoming Barclays Capital 2012 Global Healthcare Conference in Miami Beach, Florida, on March 14, 2012. The company will be represented by its CEO David P. King at the conference.
Economic uncertainty is affecting LabCorp’s volume, which is palpable in the continuous decline in organic growth witnessed over the past few quarters. Organic growth was a modest 0.7% in the latest quarter (sliding from 3% in the first, 2% in the second and 1.2% in the third quarter of fiscal 2011).
With no significant job growth in the economy or an increase in commercially insured covered lives, the company’s overall volume growth will continue to languish until the economy rebounds. We expect the company to provide an update on the current environment and the various strategies adopted by it to counter the situation in the meet at Miami.
The North Carolina-based company is aiming at increasing its revenues from esoteric testing over the next few years. Riding on the acquisitions of Monogram Bioscience and Genzyme Genetics, LabCorp derives approximately 40% of revenues from genomic, esoteric and anatomic pathology categories, which can confidently climb to 45% in the next 3-5 years.
This specialized niche is now a much sought-after avenue for top-line growth, and its arch rival Quest Diagnostics ( (DGX - Analyst Report) is also engaged in strategic acquisitions to bolster its esoteric testing portfolio.
Meanwhile, LabCorp has strengthened its foothold in the diagnostics space through both organic and inorganic means and plans to collaborate with leading companies and academic institutions to provide a wider portfolio of tests. We expect the company to provide the current status on the integration process of the latest acquisitions and the synergies to be amassed.
With regard to business collaborations with Managed Care Organizations (“MCOs”), LabCorp is doing a good job. The company has renewed some significant MCO contracts and is working to improve services. Besides a few stray cases, the company found the managed care environment to be relatively stable with respect to pricing and does not expect downward pricing pressure in contract renewals. The company might discuss about the current status of contract renewals.
Considering the cases, for and against, we have a Neutral recommendation on LabCorp. The stock retains a Zacks #3 Rank (Hold) in the short term.
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