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For Immediate Release
Chicago, IL – April 16, 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 Corning Inc. ( (GLW - Analyst Report), Becton, Dickinson & Co. ( (BDX - Analyst Report), 3M Company ( (MMM - Analyst Report), Tyco Electronics, Ltd. ( (TEL - Snapshot Report) and DFC Global ( (DLLR - Analyst Report).
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Here are highlights from Friday’s Analyst Blog:
Corning to Boost Life Sciences Portfolio
Corning Inc. ( (GLW - Analyst Report) announced that it has entered into an agreement with Becton, Dickinson & Co. ( (BDX - Analyst Report) to buy a major portion of its Discovery Labware unit for about $730 million in cash. The acquisition is expected to be completed later this year, depending on certain customary closing conditions, including receipt of regulatory approvals.
The Discovery Labware unit has operations in Massachusetts, North Carolina, and the United Kingdom, and boasts of extensive dealer networks in Asia, Europeand North America.
Upon the closing of the acquisition, Corning will integrate four of the Discovery Labware unit's main product platforms into Corning's Life Sciences segment. These product platforms include plastic consumable labware, liquid-handling products, cell-based assays and cell cultureware, as well as ADME research.
The company said that the acquisition will enhance Corning’s broad portfolio of life sciences products and expand its annual revenues by 40%. In the fourth quarter, Corning’s Life Sciences business accounted for around 8% of revenue, which was down 6.5% sequentially but up 2.1% from a year ago.
The deal will help Corning to expand its global market share and benefit from the Discovery Labware unit's extensive product portfolio and established dealer network. In December last year, Corning acquired Mediatech, which was also integrated into Corning's Life Sciences segment to augment its sales.
Corning’s innovations, technologies and acquisitions help it to deliver improved results and maintain its position in an increasingly competitive market. Corning delivered a decent fourth quarter, beating the Zacks Consensus Estimates by 8 cents or 26.5%. Corning is set to report its first quarter 2012 earnings on April 27, and expects the Life Sciences business to be up 10% sequentially.
Corning does not expect the acquisition to have any impact on its 2012 financials, but believes that the transaction will be slightly accretive in 2013. Additionally, the company stated that the acquisition will aid in achieving its $10 billion revenue target in the next few years.
However, Corning faces significant competition due to market saturation, pricing pressure and product launches. For its hardware and equipment products, the company faces stiff competition from the likes of 3M Company ( (MMM - Analyst Report), Tyco Electronics, Ltd. ( (TEL - Snapshot Report), Furukawa OFS, CommScope and ADC Communications.
Corning shares currently carry a Zacks #4 Rank, which translates into a Sell rating for the short term (1–3 months).
Rating Action on DFC Global
Standard & Poor's Ratings Services (S&P) allotted “B+” issuer credit rating (ICR) to DFC Global ( (DLLR - Analyst Report) with a stable outlook.
Concurrently, the credit rating agency also allotted “B+” rating to the company’s expected $200 million notes issue.
DCF Global has also priced its proposed $200 million notes offering. The notes will carry a coupon of 3.25% with maturity scheduled for 2017.
The rating on DFC Global incorporates the company’s solid market position along with its widespread exposure and different product offerings. The rating also takes into account DFC Global’s increased leverage, negative tangible equity and modest interest coverage.
The rating agency stated that DFC Global will be considered for rating upgrades if the company maintains or lowers the leverage at below 3.5x and maintains or increases EBITDA interest coverage at above 4.0x. Also, the rating agency expects the company to maintain sufficient liquidity.
However, the rating will be subject to downgrade if profitability lowers and leverage trends or surpasses 5.0x.
DFC Global reported a strong fiscal second quarter with earnings of 51 cents, ahead of the Zacks consensus Estimate as well as year ago earnings led by a solid performance at its core business units.
The company experienced higher consumer lending revenue (shooting 61% year over year) and pawn service fees and sales increased nearly three-fold. The company also has a solid liquidity position, besides remaining focused on enhancing its shareholders value.
Going forward, the company is also expected to grab opportunities through acquisitions and deploy the available funds to further enhance future earnings.
We retain our Neutral recommendation on DFC Global over the long term. The quantitative Zacks #3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the stock over the near term.
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