Zacks Equity Research highlights Abbott Laboratories (NYSE: ABT) as the Bull of the Day and Embarq Corp. (NYSE: EQ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on TiVo, Inc. (Nasdaq: TIVO) and Simon Property Group (NYSE: SPG). Full analysis of all four stocks is available at http://at.zacks.com/?id=2676.
Here is a synopsis of all four stocks:
Bull of the Day:
Our Bull of the Day recommendation is for Abbott Laboratories (NYSE: ABT). Abbott Labs discovers, develops, manufactures and sells a diversified line of healthcare products. We expect a sizable pick-up in earnings growth rate over the next few years driven by strong sales of its lead product Humira, a rapidly growing vascular business, and on several new drug applications recently filed with the FDA. Based on our model, the company is expected to deliver double-digit growth from 2007 through 2010. We believe ABT possesses a low risk profile and will continue to trade at an industry premium. Accordingly, we continue to rate the shares a Buy with a price target of $66.
Bear of the Day:
Our Bear of the Day recommendation is for Embarq Corp. (NYSE: EQ). We maintain our Sell rating for Embarq based on a recent spike in valuation and lower expected earnings trends through 2007. We believe that the local phone business in North America, in particular service offered by regional carriers, has significant challenges ahead as local access lines continue to decline and as consumers and business customers transition to alternative solutions, including VoIP wireless and cable offerings. We also believe pricing pressure and the need to invest further in broadband infrastructure may strain overall operating margins, impacting various earnings metrics. The high level of debt is also a matter of concern.
Analyst Blog:
TiVo, Inc. (Nasdaq: TIVO) faces increasing competition from cable and satellite providers which more than three years ago began offering DVR service with its digital cable in one set-top box at no upfront costs and comparable monthly subscription rates. Despite superior functionality, TiVo's market share has since shrunk. Exacerbating the share loss, the company's relationship with DirecTV, which accounts for 2.8 million, or nearly two-thirds, of TiVo's subscriber base, is winding down, despite a recent three-year contract extension.
Simon Property Group (NYSE: SPG) continues to maintain excellent coverage ratios and has ample free cash flow to cover its dividend. With the most recent increase, Simon is now paying an annual dividend of $3.36 per share. In response to better operations, we are again raising our full-year 2007 FFO [funds from operations] estimate to $5.82 per share, up from $5.75 per share in our last report. The company's payout ratio should be about 60% in 2007, which leaves room for dividend increases.
Get the full analysis of all four stocks by going to http://at.zacks.com/?id=2649.
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.
About the Analyst Blog
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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