Zacks Equity Research highlights Ctrip.com (Nasdaq: CTRP) as the Bull of the Day and Sony Corp. (NYSE: SNE) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Nissan (Nasdaq: NSANY), Allscripts (Nasdaq: MDRX) and Patni Computer Systems (NYSE: PTI).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2676.
Here is a synopsis of all five stocks:
Bull of the Day: Ctrip.com (Nasdaq: CTRP)
Ctrip reported strong financial results for the first quarter of 2008 in spite of bad weather and again exceeded market consensus estimates. Its profit margin continued to improve due to strong revenue growth and increased commission per ticket sold. Ctrip’s results were driven by strong growth in all of its business units. We think Ctrip’s past results demonstrate that the company’s long-term growth story remains intact under almost all circumstances.
Bear of the Day: Sony Corp. (NYSE: SNE)
We believe Sony will continue to struggle as it faces competition from innovative digital products and increasing competition from low-cost Asian manufacturers as the consumer market slows. Although improvements in PS3 operations helped Sony report improved Q4 results, the company guided down 2008 expectations due to a strong Yen. We would be hesitant to own shares of a consumer focused company, and maintain a Sell recommendation on Sony shares with a price target of $42.50.
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Nissan (Nasdaq: NSANY)
Nissan has been accelerating its growth and increasing market share with the aid of several successful product launches. The company has various nine new model launches planned for the fiscal 2008.
The current Nissan Value-Up plan targets sale of 4.2 million units by fiscal 2009 and a minimum of 20% return on invested capital. The company's recently announced 5-year plan, GT 2012, focuses on quality leadership, zero-emission vehicles leadership, cost leadership, business and market expansion, and 5% revenue growth on average over 2008-2012.
Allscripts (Nasdaq: MDRX)
Allscripts reported weaker-than-expected first quarter revenues on weak bookings, missing our EPS estimate by a penny. Despite improvement during the quarter, TouchWorks Version 11 (v11) still lagged expectations. Roughly $3 million of sales related to v11 will be recognized in future quarters.
Management reaffirmed lower end of 2008 guidance, not including the Misys merger. Headcount challenges continue straining ability to implement deals and provide adequate support services. Stronger gross margins offset by higher SG&A.
Our 2008 EPS estimate remains unchanged, below management guidance, on higher SG&A hiring costs, increased amortization and interest expense, as well as reduced gross margin. Our target moves to $12.65.
Patni Computer Systems (NYSE: PTI)
Patni reported in-line revenues but much lower-than-expected earnings in the first quarter of 2008 due to lower gross margin as well as foreign exchange losses. The company benefited from a lower-than-expected effective tax rate in the quarter.
We are maintaining our revenue and earnings estimates for the rest of 2008 and believe that the company has significant execution risks going forward, although it may be helped by a depreciating rupee. Lackluster guidance, margin pressures and possibility of a consumer-driven recession in U.S.A. imply subdued business momentum.
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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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