Zacks Equity Research highlights GameStop (NYSE: GME) as the Bull of the Day and Avnet, Inc. (NYSE: AVT) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Citi Trends (Nasdaq: CTRN) and Atmel (Nasdaq: ATML). 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 GameStop (NYSE: GME). GameStop's first quarter results demonstrate that the current video game cycle is going strong. Moreover, we believe that GameStop is well-positioned to take advantage of this product cycle, which should last for the next few years. That's because no matter which game console or software titles eventually win out, GameStop will succeed by selling the most popular consoles and titles in its stores. All told, GameStop remains one of our favorite stocks in the retail sector. We reiterate our Buy rating and increase our target price from $40 to $45, which is 23x our fiscal year 2008 EPS [earnings per share] estimate.
Bear of the Day:
Our Bear of the Day recommendation is for Avnet, Inc. (NYSE: AVT). Avnet is one of the largest distributors of electronic components and computer products. March quarter revenue and EPS [earnings per share] fell short of consensus expectations. Forward guidance is for 5-10% increase in the June quarter, driven by the Access acquisition. Weak microprocessor sales and EMS [Electronics Manufacturing Services] demand continue to exert a negative impact on the Electronics Marketing (EM) Group and Technology Solutions (TS). Besides the weakness in Asia, we remain concerned about the high level of debt. We are reiterating our Sell rating in view of various issues in the core business, the high level of debt and the rich valuation.
Analyst Blog:
Citi Trends' (Nasdaq: CTRN) first quarter earnings were $0.40 per share versus our estimate of $0.49. The shortfall was due to unseasonably cold temperatures in the southeastern U.S. Management also reduced its full-year 2007 EPS [earnings per share] guidance from $1.73-$1.77 to $1.64-$1.68. Despite the earnings miss, we maintain our Buy rating. We did lower our target price from $57 to $54, which is 25 times our 2008 EPS estimate. We think the stock can support a premium P/E [price-to-earnings] multiple due to its potential for long-term growth. In our view, the company's strong merchandising efforts, aggressive growth strategy, and profitable store model will continue to drive its long-term growth.
While taking steps to improve its cost structure, Atmel (Nasdaq: ATML) must struggle with ASP [application service provider] erosion in key product markets and face the challenges of manufacturing new products on advanced technologies. Moreover, we are concerned that the economy is starting to slow. We are maintaining our Sell rating and target price of $4.75, which is roughly 22.0 times our 2007 EPS [earnings per share] estimate. This valuation implies a target multiple that is below the median P/E [price-to-earnings] multiple for the industry.
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.
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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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