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The Zacks Analyst Blog Highlights: Bed Bath & Beyond, Cost Plus, Target, Wal-Mart and St. Jude Medical

BBBY TGT WMT STJ

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For Immediate Release

Chicago, IL – May 11, 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 Bed Bath & Beyond (BBBY - Analyst Report), Cost Plus , Target ((TGT - Analyst Report)), Wal-Mart ((WMT - Analyst Report)) and St. Jude Medical ((STJ - Analyst Report)).

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Here are highlights from Thursday’s Analyst Blog:

Bed, Bath & Beyond to Acquire Cost Plus

 

Bed Bath & Beyond Inc. (BBBY - Analyst Report), one of the leading operators of specialty retail stores in the U.S. and Canada, has agreed to buy leading casual home furnishings and entertainment products retailer, Cost Plus Inc. in an all-cash transaction.

As per the agreement, Bed Bath will make a cash tender offer for all shares of Cost Plus for a consideration of $22 per share followed by a merger. The transaction has received approval from all shareholders of both companies.

The tender offer depends on the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, tendering of shares by a minimum of 90% of Cost Plus shareholders and other customary closing conditions. Additionally, Bed Bath has the option to buy newly issued shares of Cost Plus, under the top-up right in order to meet minimum tender condition.

Bed Bath has signed agreements with two largest stakeholders of Cost Plus -- Red Mountain Capital Partners LLC and Stephens Investment Holdings LLC -- agreeing to tender all their shares, which is about 26% interest in Cost Plus.

The transaction, which is scheduled to close in Bed Bath's second quarter of fiscal 2012, is expected to be accretive to the merged company’s fiscal 2012 earnings per share. Bed Bath’s projects the acquisition to increase its fiscal 2012 earnings in the high single digit to a low double-digit percentage range. The company expects to fund the transaction with the company’s cash on hand.

Following the transaction, Cost Plus will retain its Oakland, California headquarters. The company currently operates 259 stores under the names World Market, Cost Plus World Market, Cost Plus Imports and World Market Stores in 30 states.

Bed Bath & Beyond Inc. offers merchandise under Bed Bath & Beyond, Harmon, Christmas Tree Shops (CTS) and buybuy BABY stores. The New Jersey-based company operated a total of 1,175 stores, including 995 Bed Bath & Beyond stores, 71 CTS stores, 45 Harmon stores and 64 buybuy BABY stores spread across 50 states of the United States, the District of Columbia, Puerto Rico and Canada. Apart from this, the company operates two retail stores in Mexico City under the name Home & More through a joint venture.

Bed Bath & Beyond operates in a highly fragmented industry and faces competition from larger retailers, such as Target Corporation ((TGT - Analyst Report)) and Wal-Mart Stores Inc. ((WMT - Analyst Report)) as well as from departmental and specialty stores.

Currently, Bed Bath & Beyond holds a Zacks #3 Rank, implying a short-term Hold rating on the stock. The company retains a long-term Neutral recommendation on the stock.

 

 

St. Jude Wins Ellipse Approval

 

Medical devices major St. Jude Medical ((STJ - Analyst Report)) recently revealed approval from the U.S. Food and Drug Administration (“FDA”) for its Ellipse implantable cardioverter defibrillator (“ICD”). ICDs are sophisticated implantable devices used to treat abnormal and lethal rapid heartbeat, which may lead to unexpected death due to cardiac problems.  

The Ellipse ICD was developed with input from over 200 doctors. It incorporates special design enhancements to yield a miniscule high energy device, which is the smallest in the world. This ICD was created to increase both comfort for patients and usability for doctors.  

According to a doctor, the Ellipse ICD takes into account safety aspects with its latest algorithms designed to reduce shocks. Furthermore, this device offers the same cutting edge parameters incorporated in the company’s Fortify Assura ICD.

The Ellipse ICD is in compliance with International Standards Organization’s (“ISO”) specification for connector. Its DF4 connector cuts down the count of connections between the device and the defibrillation lead. It is noteworthy that St. Jude was the first company to offer DF4 know-how in 2009.    

St. Jude is consistently producing revenue growth and positive earnings surprises over the past several quarters. We are impressed by its solid fundamentals, healthy growth trajectory, strong product mix, robust pipeline and cost management initiatives.

While a host of new growth drivers (including new products and emerging markets) are expected to boost results in 2012 and beyond, we remain cautious about increased competition, a still soft CRM market and the dilutive impact of acquisitions.

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