For Immediate Release
Chicago, IL – January 15, 2013 – Zacks Equity Research highlights Texas Capital Bancshares (TCBI - Analyst Report) as the Bull of the Day and Weatherford International ( (WFT - Analyst Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on the eBay (EBAY - Analyst Report) , Amazon.com (AMZN - Analyst Report) and Netflix (NFLX - Analyst Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Texas Capital Bancshares (TCBI - Analyst Report) third-quarter 2012 operating earnings marginally surpassed the Zacks Consensus Estimate. Quarterly results benefited from an increased top line aided by improved net interest income and non-interest income.
The company's business model remains a primary growth driver. In addition, the gain in market share from its competitors and organic growth is impressive. Its efforts to hire experienced bankers and expand its presence are encouraging.
We believe that with an eventual improvement in the Texas economy, the company would be poised to experience a further increase in earnings. Our six-month target price of $53.00 equates to 18.2x Zacks Consensus Estimate for 2012. This target price implies an expected return of about 14.6% over that period, consistent with our long-term Outperform recommendation on the shares.
Bear of the Day:
We are maintaining our recommendation on Weatherford International (WFT - Analyst Report) at Underperform. Operating results in the third quarter were challenging, and several one-time or transitory issues impacted the results.
The company expects its poor-margin Iraqi contract to hurt operations and shrink the average output in 2012. It has not resolved its material weakness related to income taxes and found errors related to its percentage of completion accounting in Iraq. Third quarter international results were weak across the board with lower-than-expected revenues and margins.
Low gas prices also remain a concern. Given these headwinds, we expect shares of Weatherford to be under pressure in the near future.
Will eBay Beat Estimates in Q4?
We expect online retailer eBay Inc. (EBAY - Analyst Report) to beat expectations when it reports fourth quarter 2012 results on January 16th.
Why a Likely Positive Surprise?
Our proven model shows that eBay is likely to beat earnings because it has the right combination of two key ingredients.
Positive Zacks ESP: The Earnings Surprise Prediction or ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is at 3.28%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.
Zacks Rank #2 (Buy): Note that stocks with Zacks Ranks of #1, #2 and #3 have a significantly higher chance of beating earnings estimates. The sell-rated stocks (Zacks Rank #4 and #5) should never be considered going into an earnings announcement.
The combination of eBay’s Zacks Rank #2 (Buy) and 3.28% ESP makes us very confident about looking for a positive earnings beat on January 16th.
What is Driving the Better than Expected Earnings?
eBay’s impressive business strategy, strength atPaypal, opportunities in the fast-growing mobile space, restructuring at its PayPal business unit and overall strength in eCommerce are expected to drive results in the upcoming quarter.
PayPal, which accounts for almost half of eBay's annual revenue, is expanding beyond its online payments service. PayPal’s point of sale (POS) represents an incremental growth driver, given its focus on the top 20 national retailers, a few of which have already agreed to accept PayPal as a payment mode. eBay’s agreement with Discover has also opened up PayPal access to more than 7 million merchant locations, expanding its addressable market.
As smartphone migration continues, eBay is seeing great opportunities in the mobile space. The PayPal Mobile Express Checkout system and the Zong acquisition will boost the company’s mobile payment volumes. According to management, PayPal expects to process $10 billion in mobile payments this year.
The positive trend is seen in the trailing four-quarter average surprise of8.83%.
Other Stocks to Consider
eBay is not the only firm looking up this earnings season. We also see likely earnings beats coming from these 2 industry peers:
Amazon.com Inc. (AMZN - Analyst Report) , Earnings ESP of +20.69% and Zacks Rank #3 (Hold)
Netflix Inc. (NFLX - Analyst Report) , Earnings ESP of +8.33% and Zacks Rank #3 (Hold)
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About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
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Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.
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