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Posted Tue Mar 11, 01:40 pm ET
by Zacks Equity Research
Harris Corporation (HRS), a leading supplier of communications equipment and services, won an 18-month follow-on contract from The Boeing Company (BA) to supply ka-band antennas to the fourth Inmarsat Global Xpress satellite. The deal was announced at the SATELLITE 2014 Conference and Exhibition held in Washington, D.C.
As per the deal, Harris will supply Boeing with antennas which will help in transferring signals from an Inmarsat satellite in orbit through wireless connectivity from deep sea vessels to airline passengers. The global express network is expected to deliver worldwide coverage by the end of this year. Notably, Harris has provided antennas to the previous three Inmarsat Global Xpress Satellites.
Another encouraging announcement at the conference informed that Harris’ Automatic Dependent Surveillance-Broadcast (ADS-B) 1090 Extended Squitter receiver payload has qualified for operations in space.
Harris has already won $234 million worth of tactical radio contracts globally in the past few months. Notably, more than 45,000 radios have been sent to the U.S. Department of Defense and allied forces in more than 15 countries.
In the first quarter of fiscal 2014, Harris reported mixed financial results with the bottom line beating the Zacks Consensus Estimate but the top line missing the same. In the reported quarter, the RF Communications segment generated orders worth $348 million of which 65% was generated from the Tactical Radio Communications unit. Moreover, the total order backlog in the Tactical Radio Communications division amounted to $664 million.
Harris currently carries a Zacks Rank #2 (Buy).
Other Stocks to consider
Posted Tue Mar 11, 01:38 pm ET
by Souvik Guha
Shares of Calif.-based medical instruments maker Varian Medical Systems (VAR) reached new 52-week high of $84.79 in mid-day trading yesterday. Shares of the company closed at $84.34 on the same day, representing a decent one-year return 14.3%.
VAR has a market cap of $8.7 billion. Average volume of shares traded over the last three months stood at approximately 701.4K.
Shares of VAR started escalating following its announcement of several events supporting the increased adoption of the company’s technology and the exhibition of a comprehensive line of products in the pipeline.
VAR posted a 5.8% rise in net earnings per share to 91 cents for the first quarter of fiscal 2014 from 86 cents in the prior fiscal quarter, and edged past the Zacks Consensus Estimate by a penny. With this, VAR also met its own guidance of a 6–7% rise in earnings per share to 87–91 cents for the quarter.
Revenues in the quarter escalated nearly 5.0% to $711.5 million during the quarter, but lagged the Zacks Consensus Estimate of $718 million. The growth was attributable to the continued strong demand for Oncology services and X-ray imaging components during the quarter.
For fiscal 2014, VAR expects revenues to grow by 6–8% compared with the earlier guidance of 6–7%. However, the company reiterated its earnings per share guidance between $4.22 and $4.34 for the year. The current Zacks Consensus Estimate of $4.29 lies within the guided range.
For the second quarter of fiscal 2014, VAR expects revenues to be flat on a year-over-year basis. However, it expects earnings per share for the quarter in the range of $1.00 to $1.04. The current Zacks Consensus Estimate of $1.02 lies within the guided range.
Currently, VAR carries a Zacks Rank #3 (Hold). Some better-ranked medical instrument stocks that currently worth a look include Cynosure Inc. (CYNO), Natus Medical Inc. (BABY), and Syneron Medical Ltd. (ELOS). All of them sport a Zacks Rank #1 (Strong Buy).
Posted Tue Mar 11, 01:30 pm ET
by Zacks Equity Research
NII Holdings Inc. (NIHD), the struggling Latin American wireless service provider, has decided to explore several strategic options for its future course of business. The company has hired investment bank UBS AG as an advisory body.
These include forming a partnership with other wireless operators, disinvestment of some part of its existing business or a merger or complete sale out of the company to any prospective buyer.
NII Holdings, which provides telecom services under the Nextel brand, is facing severe competitive threat from America Movil S.A.B. (AMX) and Telefonica S.A. (TEF). These companies are aggressively deploying 3G wireless technologies in major Latin American markets, offering faster download speed for smartphones.
NII Holdings failed to establish its iDEN walkie-talkie based phone service as a potential replacement to other digital technology formats such as, GSM or CDMA used by mobile-phone giants in Mexico and Brazil.
Furthermore, NII Holdings is currently under a potential liquidity trap. The company has approximately $1.7 billion in cash and $5.8 billion of debt. Management stated that it has sufficient funds to meet the company’s obligations in 2014.
However, NII Holdings is poised to face serious troubles from 2015 until it makes a significant turnaround in its business. Unfortunately, management is expecting that the subscriber base will only deteriorate in Mexico going forward. The company has retained Rothschild Inc. as its financial adviser.
In the fourth quarter of 2013, NII Holdings’ total revenue was down 21.8% whereas net loss was up a whopping 56.3% year over year. Customer churn was 3.85% compared with 3.4% in the prior-year quarter. Average revenue per user was $31 against $40 in the year-ago quarter. The stock price has tumbled a whopping 88.5% in the last year. Currently, NII Holdings has a Zacks Rank #3 (Hold).
In order to overcome financial crisis, NII Holdings struck a deal with American Tower Corp. (AMT). Per the deal, the company sold 2,790 Brazilian towers and 1,666 Mexican towers for $413 million and $398 million, respectively.
In Dec 2013, the company downsized its headquarter’s workforce by over 25% along with eliminating over 1,400 manpower in marker operations. This restructuring process is aimed to streamline management’s structure, which is expected to improve efficiency and reduce costs by $50 - $55 million per annum.
Posted Tue Mar 11, 01:20 pm ET
by Zacks Equity Research
General Motors Co. (GM) announced that it is hiring a team to probe into an ignition switch recall of 1.6 million older-model small cars associated with 31 crashes with 13 front-seat fatalities. The investigation team comprises attorney Anton Valukas, the chairman of Chicago law firm Jenner & Block Tony Valukas and General Motors’ general counsel Michael Millikin. In addition, attorneys from the King & Spalding firm will be joining the team.
General Motors will carry out the investigation to gain an unbiased report on the reason behind the delayed recall. Given his efficiency in the Lehman Brothers bankruptcy case, the company believes that Valukas’ presence will add value to the investigation.
After the report of the accidents, General Motors announced a recall of 842,000 2003-2007 Saturn Ions, 2006-2007 Chevrolet HHRs, and 2006-2007 Pontiac Solstice and Saturn Sky models in addition to the recall of 778,562 Chevrolet Cobalt and 2005-2007 Pontiac G5 compact cars in North America on Feb 13, 2014. With this, the company is recalling 1,367,146 vehicles in total.
The company will fix the faulty ignition switches, which has been identified as the cause of the accidents. According to General Motors, a heavy key ring or uneven roads can cause the ignition switch to shift away from the run position, thus turning off the engine and electrical power. In such a situation, the front air bags will not inflate in case of a crash.
General Motors is focused on resolving the issue and also apologized for the delay. The company will be informing customers and will rectify the fault at no extra charge.
The chronology of events filed with the The National Highway Traffic Safety Administration (NHTSA) clearly points out General Motors’ awareness of the problem since 2004, when its engineer detected the hitch while test driving the 2005 Chevrolet Cobalt. The company initially attempted to avoid a recall by issuing Technical Service Bulletins for the problem. The bulletin advised inserting a key into the ignition switch of the Chevrolet HHR and Cobalt, Pontiac Solstice and G5, and Saturn Sky and Ion vehicles. Moreover, the automaker advised its customers not to use heavy key chains.
NHTSA, the auto safety supervisory body of the U.S. government, has announced an investigation into General Motors’s delayed recall. Lawfully, the automakers are supposed to alert the NHTSA about any safety concern in vehicles within five business days of recognizing the problem. The maximum fine for late reporting currently stands at $35 million.
General Motors currently holds a Zacks Rank #5 (Strong Sell).
Better-ranked automobile stocks worth considering are Tata Motors Limited (TTM), Daimler AG (DDAIF) and Tesla Motors, Inc. (TSLA). Tata and Daimler sport a Zacks Rank #1 (Strong Buy) while Tesla is Zacks Rank #2 (Buy) stock.
Posted Tue Mar 11, 01:10 pm ET
by Zacks Equity Research
On Mar 7, 2014, Atlas Resource Partners LP (ARP), a master limited partnership, declared the closure of the earlier announced common units offering. The partnership priced the 6,325,000 common units at $21.18 a piece. Moreover, the over-allotment option of the underwriters for purchasing 825,000 extra common units was fully exercised.
The partnership will likely utilize the proceeds – roughly $129.0 million − for financing the purchase of natural gas properties from GeoMet Inc., an upstream operator. Atlas Resource might also allocate part or whole of the funds toward normal partnership activities.
Pittsburgh, Pennsylvania-located Atlas Resource is primarily involved in the exploration and production of liquid and natural gas. The partnership executes upstream operations in U.S.-based basins. The operating segments of Atlas Resource are Gas and oil production, Well construction and completion and Gathering and processing. On Feb 27, 2014, the partnership reported weak fourth-quarter 2013 results. Atlas Resource reported loss per unit of 77 cents, wider than the year-ago loss of 53 cents. The reported figure was also wider than the Zacks Consensus Estimate of a loss of 3 cents per unit. Substantially higher operating expenses hampered the results.
Currently, Atlas Resource Partners retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next 1 to 3 months.
Meanwhile, one can look at better-ranked players in the oil exploration and production industry like Range Resources Corporation (RRC), Warren Resources Inc. (WRES) and Abraxas Petroleum Corp. (AXAS). Range Resources and Warren Resources sport a Zacks Rank #1 (Strong Buy), while Abraxas Petroleum carries a Zacks Rank #2 (Buy).
Posted Tue Mar 11, 01:00 pm ET
by Zacks Equity Research
The share price of Universal Technical Institute, Inc. (UTI) has been moving up since the formal inauguration of a new campus in Lisle on Mar 6, 2014. Universal Technical Institute is a leading provider of post-secondary education in the United States, offering degree, diploma and certificate programs in the fields of professional automotive, diesel, collision repair, motorcycle and marine. The company intends to capitalize on an improving automobile industry and cater to the growing demand for career oriented programs. This new 187,000-square-foot facility replaces the Glendale Heights campus.
The Lisle campus is one of the 11 campuses that the company operates across the U.S and can accommodate about 2,000 students and up to 150 faculty and staff. Lisle will offer four manufacturer specific advanced training (MSAT) programs that the students can opt for after the completion of a core program. The four programs include FORD Accelerated Credential Training (FACT), Honda Professional Automotive Career Training (PACT), International Technician Education Program (ITEP) and Toyota Professional Automotive Technician Training Program (TPAT).
The automobile industry has begun to show some recovery. As a result, there is a growing need for trained technicians. Employment rates are improving and so are wages. Several post-secondary education providers have been witnessing positive growth in student applications and the quality of students over the past few quarters and expect new enrollment to improve in the upcoming quarters.
Universal Technical has a Zacks Rank #3 (Hold).
Other Stocks to Consider
Investors interested in the education sector can also consider Strayer Education Inc. (STRA), New Oriental Education & Technology Group Inc. (EDU) and TAL Education Group (XRS). While Strayer Education and TAL Education sport a Zacks Rank #1 (Strong Buy), New Oriental Education holds a Zacks Rank #2 (Buy).
Posted Tue Mar 11, 12:50 pm ET
by Zacks Equity Research
Following reports over Vodafone Group plc’s (VOD) plans of acquiring Madrid-based provider of broadband and entertainment services, ONO, in Feb, the company has now come up with a revised proposal worth €7 billion or $10 billion for the buyout. According to Bloomberg, Vodafone in its meeting with key shareholders on Mar 5, came up with this bid although the final agreement is yet to be decided upon.
Meanwhile, ONO is preparing for its initial public offering slated to be released this month. The acquisition is expected to bode well for the company’s growth in data services by aiding its broadband infrastructure.
Vodafone has taken growth initiatives through acquisitions and partnerships in emerging markets like Asia, Eastern Europe and Africa. The company continues to aggressively pursue acquisitions or investments in incipient markets, making itself more competitive against other European telecoms like Telef (TEF), Orange (ORAN) and Telecom Italia S.p.A. (TI).
The company acquired a 76.48% stake in Kabel Deutschland for €7.7 billion ($10.21 billion) in Sep 2013, and settled on a domination agreement requiring payment of €84.53 per share to the remaining shareholders. We believe that the successful completion of the domination agreement will strengthen Vodafone’s position in the acquired company. Moreover, in the same month, Vodafone reached an agreement with Verizon to sell its 45% interest in Verizon Wireless for $130 billion. The company closed the deal on Feb 21, 2014. In Sep 2013, the company also announced plans to buy Verizon's stakes in Vodafone Italia, which is around (23.14%), for $3.5 billion. Moreover, the company struck a wholesale agreement with Deutsche Telecom for offering high-speed fixed-line broadband and Internet protocol-based TV services across Germany.
In Spain, the company is gaining from its tie-up with Orange and has also entered into a vertical access agreement with Telefonica for accessing the fiber optic network. In Greece, Vodafone entered into an active 2G and 3G network sharing agreement covering rural and urban areas. In Portugal, the company has started the extension of its fiber-to-the-home program, targeting to double the number of homes covered to approximately 1 million.
Vodafone also has plans for the Asian market. It is reportedly in talks to buy Indian broadband and telecommunication company, Tata Teleservices Ltd. Further, Vodafone is reportedly going solo in the country with the complete acquisition of its Indian joint venture, Vodafone India. With increasing number of customers seeking data services, strong marketing campaign and flexible price plans, Vodafone expects continued growth in the sub continent.
Vodafone has a Zacks Rank #3 (Hold).
Posted Tue Mar 11, 12:40 pm ET
by Zacks Equity Research
World leader in pizza delivery, Domino's Pizza, Inc. (DPZ) recently announced the opening of a store in Asuncion, Paraguay in collaboration with its franchisee, Grupo Vierci. This store marks the entry of Domino's Pizza in Paraguay.
Domino's Pizza intends to capitalize on Grupo Vierci’s extensive knowledge of the local market to expand its offerings in the region. The company intends to have three stores active by the end of May 2014. We believe that expanding its footprint in this market would be profitable as Asuncion currently has limited pizza delivery options.
Since Domino’s earns the majority of its revenues from outside the U.S., it is committed to accelerate its presence in high-growth international markets. Currently, Domino’s has established its presence in 70 countries worldwide.
Moreover, the company is concentrating and investing heavily on technology-driven initiatives like digital ordering. Domino’s has been regularly launching new apps to boost its digital ordering platform. In 2013, Domino's generated approximately 40% of sales in the U.S. from its digital channels, thanks to the introduction of ordering apps. Domino's ordering apps now cover approximately 95% of the U.S. smartphone market.
However, like other food chains, this Zacks Rank #3 (Hold) company is also facing troubles due to a weak consumer spending environment owing to macroeconomic pressure. Moreover, food cost inflation remains a concern.
Some better-ranked stocks in the restaurants industry include Famous Dave's of America Inc. (DAVE), The Wendy's Company (WEN) and Brinker International, Inc. (EAT). While Famous Dave's of America and The Wendy's sport a Zacks Rank #1 (Strong Buy), Brinker International holds a Zacks Rank #2 (Buy).
Posted Tue Mar 11, 12:30 pm ET
by Zacks Equity Research
Recently Google Inc. (GOOG) announced the launch of the Google Apps referral program. According to the program, app users in the U.S. and Canada will earn an incentive of $15, every time a new customer signs up for Google Apps based on their recommendation.
Google Apps provides different services like Gmail, Google Calendar, Google Drive, Google Docs, Sheets, Slides, and many more. At present it has a customer base of nearly 5 million.
To join this program, users have to sign up using their email ids and should have an official taxpayer ID number and a bank account. After registering, they will receive a unique referral URL. They can then recommend their contacts by emailing the referral link and get paid depending on the number of new sign ups through that link.
Each user can refer unlimited number of consumers and will be rewarded for the first 100 signups through them. The payments will be made directly to the bank account of the primary user and will depend on the number of users who have paid for a minimum of 120 days for the Google services.
Google will also offer vouchers with which the referral customers can save $10 per user for the first year of their subscription.
Google plans to offer an improved experience for both new and existing users. Also, the program will be cost effective for the search giant as it will have to pay a moderate sum for acquiring new users.
Google is clearly the leader in search, with Yahoo! Inc. (YHOO) and Microsoft Corporation (MSFT) lagging far behind. To maintain its dominance, Google is aggressively exploring new markets to diversify its revenues.
Rumor has it that Google will also release a smartwatch, which will be built by LG Electronics to compete against similar products from Apple Inc. (AAPL) and Intel.
Google currently has a Zacks Rank #3 (Hold).
Posted Tue Mar 11, 12:20 pm ET
by Zacks Equity Research
On Mar 11, Zacks Investment Research upgraded Apollo Education Group Inc. (APOL) to a Zacks Rank #1 (Strong Buy). Apollo’s share price has been on an upswing following the release of its online learning platform, Balloon, on Mar 4.
Why the Upgrade?
Apollo Education's wholly-owned subsidiary, Apollo Lightspeed recently launched Balloon, an online career skills and learning platform. . Balloon is the first global technology marketplace that features a catalogue of over 14,000 technology and training programs from various education providers and a database of over 146,000 career listings. It helps to bridge the gap between career-seekers' skills and employers' talent needs.
Balloon understands the knowledge and skill requirements of employers from 25 leading technology companies. It helps students to opt for the right online programs that make them eligible in the skilled labor market. Balloon connects technology companies with students seeking career oriented programs. Apollo’s enrollment trends are likely to benefit from this recent launch.
Apollo has been implementing several measures to revive its enrollment trends. In Dec 2013, the company agreed to acquire 70% of the outstanding stock of Open Colleges Australia Pty Ltd (also known as Open Colleges). The acquisition will allow Apollo Global to access the growing education market in Australia and focus its resources in the high-potential international education market. This will result in further improvement in enrollment in the upcoming quarters.
Other Stocks to Consider
Investors interested in the education sector can also consider Strayer Education Inc. (STRA), New Oriental Education & Technology Group Inc. (EDU) and TAL Education Group (XRS). While Strayer Education and TAL Education sport a Zacks Rank #1 (Strong Buy), New Oriental Education has a Zacks Rank #2 (Buy).
The content contained in this weblog feature may have been abstracted from a complete Zacks Equity Research report.
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