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For Immediate Release
Chicago, IL – November 15, 2012 – Zacks Equity Research highlights Quanta Services, Inc (NYSE:(PWR - Analyst Report) as the Bull of the Day and E.I. DuPont de Nemours & Co. ((DD - Analyst Report)) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Leapfrog Enterprises Inc (LF - Snapshot Report), Lions Gate Entertainment Corp (LGF - Analyst Report) and Mattel Inc (MAT - Analyst Report).
Here is a synopsis of all five stocks:
Bull of the Day:
We have upgraded our recommendation from Neutral to Outperform on Quanta Services, Inc. (PWR - Analyst Report). The company's third quarter 2012 results were encouraging, with earnings of 45 cents -- 25% ahead of the Zacks Consensus Estimate and 80% above the prior-year level.
Quanta's strengths include strong execution, increasing demand for its services and customer confidence in the company. Revenues from the electric power segment grew 32%, while the natural gas and pipeline segment continued to improve despite the lack of large-diameter pipeline projects.
Over the last five years, PWR's shares have traded in a range of 18.4x to 46.4x trailing 12-month earnings. Our target price is $32.00 or 20.4x 2013 EPS, which is well within the historical range.
Bear of the Day:
We are downgrading our recommendation on E.I. DuPont de Nemours & Co. ((DD - Analyst Report)) to Underperform following its lackluster third quarter results. Both revenues and adjusted earnings missed the Zacks Consensus Estimate.
Profit tumbled year over year due to lower demand across titanium dioxide and photovoltaic markets. DuPont witnessed weakness across a number of end markets in the quarter. The company reduced its earnings forecast for 2012 and announced a restructuring plan that includes headcount reductions.
DuPont is exposed to raw material cost inflation and currency headwinds and is witnessing a decline in sales volumes across many segments. Moreover, sluggish economic conditions may continue to dent its results going forward.
LeapFrog Inks Deal with Lions Gate
Educational entertainment leader, LeapFrog Enterprises Inc. (LF - Snapshot Report), recently penned a new multi-year agreement with Lions Gate Entertainment Corp. (LGF - Analyst Report) to develop, produce and distribute four brand new animated DVD and digital movies. The movies, featuring updated characters, new adventures and new subject learning syllabus, are slated to be released in early 2014.
Lions Gate is a film studio engaged in the production and distribution of motion pictures for theater and straight-to-video release and also television programming for cable and broadcast networks. The company has a strong track record of producing small and mid-budget specialty films.
The partnership is not new to LeapFrog. The company joined forces with Lions Gate way back in 2008. Since then, the companies have released 12 animated DVDs that featured well-liked LeapFrog characters such as Scout & Friends, Leap, Lily and Tad. The new treaty portrays their commitment to children for entertaining yet educational movies which are apt for their age.
With the signing of the new agreement, LeapFrog has extended the distribution rights of Lions Gate on its movie catalog. Lions Gate now possesses the worldwide distribution rights to both physical and digital content from the new movies. In addition, LeapFrog has preserved its rights to distribute the new content on its own proprietary digital platforms.
As a matter of fact, the new agreement immediately follows LeapFrog’s recent announcement of two new programs – Magnificent Museum of Opposite Words, and Adventures in Shapeville Park. Both are due to be launched in January 2013.
We remain impressed with LeapFrog’s core strategy to boost its educational entertainment platform. Earlier this month the company added Barbie to its award winning learning platform through the collaboration with the world's largest toy company – Mattel Inc. (MAT - Analyst Report). Till date, the company’s strong home entertainment section has sold roughly nine million units.
Emeryville, California-based LeapFrog recently reported earnings of 60 cents per share in the third quarter of 2012, which breezed past the Zacks Consensus Estimate of 41 cents. With this, the company achieved the record of nine consecutive quarters of higher earnings. At the end of the quarter, LeapFrog's products were available in over 45 countries and used by teachers in around 100,000 U.S. classrooms.
We are maintaining our long-term Outperform recommendation on LeapFrog. It carries a short term Zacks #2 Rank (Buy).
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