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Bear of the Day


When I think about consumer electronics companies I think about innovation. I think about awesome devices that enrich our lives. I love checking out the newest gadgets available. It’s part of the reason why I’m so excited for the dawn of augmented and virtual reality. But what happens when an electronics company slows down on innovation? For me, it takes away from the wonder.

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That’s part of the reason I’m naming Sony (SNE - Analyst Report) today’s Bear of the Day. I know the Playstation fans out there are going to hate me for this but they’ve got more patience than I do. As they say, they’re still awaiting greatness. Sony designs, develops, manufactures and sells electronic equipment, instruments and devices for consumer, professional and industrial markets worldwide.

The earnings estimate trend for Sony has been a bit bearish recently. For the current year, two analysts have dropped their estimates. The dip in the estimates has taken down our Zacks Consensus Estimate from $2.07 to 79 cents. Production delays have been crippling to Sony’s bottom line lately. It seems that analysts believe it will be a temporary situation. Next year’s consensus number has only dropped from $2.53 to $2.20.

So with the backdrop of analysts feeling that way I’m looking at the stock chart through bearish glasses. I do have a lot of respect for the move the stock has made over the last couple of months. Right now I feel like it’s butting up against the top end of its trading range at $28. It will take some sort of catalyst for it to leapfrog this level. I’m not sure what that catalyst can be. Also, the commodity channel index pushed above 100 last week and has since retreated a bit. A dip below the zero line and now you’ve got a “Sell” signal from the CCI. That would put $25 on the radar with a possible retest of the May lows near $23.50.

Investors looking for other stocks in the same industry should check out Zacks Rank #1 (Strong Buy) Dolby Lab (DLB - Analyst Report) . Both GoPro (GPRO - Analyst Report) and Panasonic (PCRFY - Snapshot Report) are Zacks Rank #3 (Hold) stocks right now.

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