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For Immediate Release
Chicago, IL – May 8, 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 Dish Network ( (DISH - Analyst Report), Tyson Foods ( (TSN - Analyst Report), Avis Budget Group ( (CAR - Analyst Report), PepsiCo Inc. ( (PEP - Analyst Report) and The Coca Cola Company ( (KO - Analyst Report).
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Here are highlights from Monday’s Analyst Blog:
Sea Change in France Triggers Sell-Off
Asian and European investors’ first response to the weekend election in France (and Greece) has been to run for cover. This theme will likely be the dominant driver of market action today in the U.S., as it did in Europe and Asia as the new week got underway. But does this reaction make economic sense or is it just another sign of a collective knee-jerk response from investors worldwide?
It does make sense, and here is why:
The response of Euro-zone leadership, which basically means Germany and France, to the region’s mounting financial crisis over the last three years has been to institute measures that will restore market confidence. The most important of such confidence boosting measures has been to cut deficits through tough austerity measures. The premise behind this policy line is that the implementation of a deficit reduction plan will demonstrate to the markets the country’s ability to pay back its debts.
The only problem with this otherwise reasonable logic is that implementing fiscal austerity in a backdrop of economic weakness exacerbates near-term growth. The ongoing recession in the Euro-zone is a direct result of this policy. It becomes politically difficult to sustain such policies in the face of widespread economic hardships. Electoral defeats for incumbent governments across Europe is evidence of this trend.
France has been a willing partner to Germany in pushing this policy prescription. But the election of Francois Hollande in France this weekend -- who ran on a traditional leftist pro-spending platform -- represents the first credible challenge to this German-inspired fiscal orthodoxy. It is not unreasonable for the markets to be concerned about the prospect of discord at the top of Euro-zone leadership, and that’s precisely what today’s worldwide market sell-off is reflecting.
Europe aside, it is fairly quiet on the domestic front, with the first quarter earnings season winding down and nothing major on the economic calendar. For the 84% of S&P 500 companies that have already reported, total earnings growth is tracking 6.5%, with roughly 67% coming out with positive earnings surprises. Most of the growth is coming through revenue gains, with aggregate margins essentially flat from the year-earlier level.
This is a far cry from pre-season expectations, when aggregate earnings were expected to be down modestly from the year-earlier period. Of this morning’s major earnings reports, we got better-than-expected results from Dish Network ( (DISH - Analyst Report),Tyson Foods ( (TSN - Analyst Report) and Avis Budget Group ( (CAR - Analyst Report).
Pepsi Cans & the King of Pop
PepsiCo Inc. ( (PEP - Analyst Report) has teamed up with the Estate of Michael Jackson to feature the late pop star’s image on its Pepsi cans.
Per the global partnership, the soft drink company will launch 1 billion cans of its popular soft drink, Pepsi, which will feature Michael Jackson's iconic image in silhouette. The partnership is part of PepsiCo’s broader ‘Live for Now’ marketing campaign which was launched in U.S. last month. The partnership coincides with the 25th anniversary of the legendary singer’s multi-platinum album, Bad.
The campaign will also feature some music events and contests where fans can win special edition merchandise. As part of the campaign, Pepsi, Jackson's estate, and his Sony Music record company have also entered into a deal to share new mixes of music from the Badalbum.
On May 5, limited edition Pepsi cans were launched throughout China and will be launched later this month in the U.S. Thereafter, the Michael Jackson activity will be rolled out in 20 other countries in Asia, South America and Europe. From May 15 to June 14, the company will offer Chinese fans tickets to a popular tour on sharing photos of their Jackson collections or original artwork.
PepsiCo is trying to lure Michael Jackson fans to boost sales of its Pepsi soft drink and win market share from its biggest competitor The Coca Cola Company ( (KO - Analyst Report).
Currently, the stock retains a Zacks #3 Rank (short-term Hold rating). Over the long term, we provide a Neutral recommendation on the stock.
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