Zacks Equity Research highlights El Paso Corporation (NYSE: EP) as the Bull of the Day and The Goldman Sachs Group Inc. (NYSE: GS) as the Bear of the Day. In addition, Zacks Equity Research provides analysis Skyworks Solutions, Inc. (Nasdaq: SWKS), Verizon (NYSE: VZ) and AT&T (NYSE: T).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Bull of the Day:
El Paso Corporation’s (NYSE: EP) high-grade E&P assets and large inventory of pipeline projects offer significant value in the long run. The company benefits from hedging a substantial portion of its future production, which offers operating clarity and cash-flow visibility even when energy prices remain volatile.
We believe the competence of management and the company’s access to financing will enable successful execution of El Paso’s industry-leading pipeline backlog going forward. We upgrade our recommendation for EP shares to Outperform based on the company’s announcement to split its business into two strong stand-alone entities, as well as its raised 2011 guidance.
We believe the separation will enable further balance sheet improvement and greater operational transparency for the new company. El Paso possesses a Zacks #1 Rank, indicating a Strong Buy.
Bear of the Day:
The Goldman Sachs Group Inc. (NYSE: GS) reported second quarter 2011 earnings per share of $1.85, significantly below the Zacks Consensus Estimate of $2.29 per share. Coupled with global macroeconomic concerns, the results deteriorated driven by a decrease in revenue and poor performance in the Institutional Client Services division.
Further, the Investing and Lending division also recorded lower revenues. After reviewing the results, we are maintaining our Underperform recommendation on the shares.
Our six-month price target of $117.00 equates to about 9.3x our earnings estimate for 2011. Combined with the $0.35 per share dividend, the price target implies an expected negative total return of 8.4% over that period, which is consistent with our Underperform recommendation.
Latest Posts on the Zacks Analyst Blog:
Skyworks Beats Expectations
Skyworks Solutions, Inc. (Nasdaq: SWKS) reported revenues of $356.1 million, which surpassed management’s guidance of $345 million. The reported figure includes $6.5 million of revenue from the acquisition of SiGe semiconductor (which closed on June 10, 2011).
Excluding the SiGe contribution, revenue would’ve been $350 million, up 27% year-over-year organically.
Skyworks posted a net income of $51.5 million or $0.27 per diluted share compared to a net income of $34.7 million or $0.19 per diluted share in the year-ago quarter. Excluding acquisition-related charges but including stock-based compensation expense, Skyworks reported a net income of $0.41 per share, beating the Zacks Consensus Estimate by a penny.
Going forward, Skyworks projects revenues of $400 million, with a $20 million – $25 million from the SiGe acquisition. Gross margin is expected around 44.6% – 45.0%. Excluding stock-based compensation expenses and restructuring charges, EPS is expected at $0.53.
Skyworks continues to benefit from strong underlying demand in the mobile Internet market driven by market share gains and new product ramps. Broadband mobile subscriptions continue to grow in leaps and bounds.
The advent of cloud computing is expected to take the trend further with the ever-growing need for wireless connectivity. The products from Skyworks support all smartphone and tablet operating systems, including Android, Symbian, Windows Mobile and others.
Skyworks continues to gain traction on the network infrastructure side of the mobile Internet connection as operators install new base stations, new routers, and back-haul equipment to expand coverage of data services and prepare for next generation LTE deployments.
As carriers like Verizon (NYSE: VZ) and AT&T (NYSE: T) accelerate their LTE plans, Skyworks expects a solid opportunity for growth in the coming years with its broad product portfolio.
Get the full analysis of all these 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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