Zacks Equity Research highlights HDFC Bank (NYSE: HDB) as the Bull of the Day and Sony Corporation (NYSE: SNE) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Marlin Business Services (Nasdaq: MRLN) and iPass, Inc. (Nasdaq: IPAS). 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 HDFC Bank (NYSE: HDB). HDFC reported fiscal third quarter (ending December 31, 2006) of Rs2,956 million, 32% ahead of last year, but below our estimate due to higher-than-expected compensation expense. We are continuing our EPADS estimate at $2.30 for fiscal 2007 (ending March 31), but increasing our fiscal 2008 estimate to $3.10 from $3.05. Results should continue to reflect strong loan growth and margin improvement, offset in part by higher compensation expense, as the company expands its branch network. We believe HDFC’s $0.38 dividend, which provides a 0.6% yield, is safe.
Bear of the Day:
Our Bear of the Day recommendation is for Sony Corporation (NYSE: SNE). We believe Sony will continue to struggle as it faces competition from innovative digital products and struggles to ramp production of its PlayStation 3. In addition, Sony is facing increasing competition from low-cost manufacturers in Asia as the consumer market slows. We therefore maintain a Sell recommendation on SNE shares with a higher price target of $38.00.
Analyst Blog:
We are reiterating our Hold rating on Marlin Business Services (Nasdaq: MRLN), but decreasing our price target. While MRLN now appears attractive on a relative basis, recent selling by a major shareholder may have put a near-term damper on appreciation. In addition to the 1 Mn shares sold, another 3.3 Mn remain registered for future sale. We expect these shareholders to be patient in exiting their investments, creating a minimal impact. The near-term overhang could still be material, however, in a stock with a $250 Mn market cap and concentrated ownership. We also note that significant management turnover during 2006 introduces an element of risk. Q4 [fourth quarter] was a bit soft, owing to elevated and hopefully non-recurring expenses. Our ‘07 estimates are virtually unchanged.
iPass, Inc.’s (Nasdaq: IPAS) subscription model and broadband access has gained enough traction to reduce its reliance on dial-up revenue. Growth in policy management initiatives and the acquisition of GoRemote is partially responsible for this. However, access is a competitive market and even broadband revenues are likely to be at risk over the longer term. We therefore maintain a Hold rating on iPass shares with a six-month price target of $5.50.
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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