CHICAGO, Sept. 27, 2011 /PRNewswire/ -- Zacks Equity
Research highlights DENTSPLY International (Nasdaq: XRAY) as
the Bull of the Day and Citi Trends, Inc. (Nasdaq: CTRN) as
the Bear of the Day. In addition, Zacks Equity Research provides
analysis Freeport McMoRan (NYSE: FCX), Joy Global
(Nasdaq: JOYG) and Cliffs Natural Resources (NYSE: CLF).
(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)
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:
We upgrade our recommendation on DENTSPLY International
(Nasdaq: XRAY) to Outperform based on our improved visibility on
the stock. Its second-quarter fiscal 2011 revenues and earnings
topped the Zacks Consensus Estimates. Revenues and profit were
boosted by internal growth and a foreign exchange tailwind.
The company beefed up its earnings guidance for fiscal 2011
based on a stable-to-improving market conditions. DENTSPLY should
benefit from the gradual recovery in the global dental market. The
company's diversified product range and significant investment in
product innovation should help it expand its share of the dental
implant market.
Moreover, the acquisition of Astra Tech has reinforced its
foothold in the global dental market and provided opportunities for
attractive synergies. We also feel that the stock offers attractive
upside potential at the current level.
Bear of the Day:
Citi Trends, Inc. (Nasdaq: CTRN) falling comparable store
sales, coupled with rising input costs and operating expenses
battered the second-quarter 2011 results. The company witnessed a
quarterly loss of $0.69 per share
that broadened 17 folds from the prior-period loss of $0.04. The Zacks Consensus Estimate for the
quarter was a loss of $0.64 per
share.
Further, due to uncertainty hovering around sales given the
global economic unrest, the company rolled back its earnings
guidance range of $1.25 to $1.35 per
share for fiscal 2011. The company decided not to provide any
guidelines unless it finds any near- term catalysts to drive
sales.
Intense competition from other retailers, seasonal nature of
business, and risks associated with sourcing merchandise from
developing countries may further undermine the company's future
growth prospects. Currently, we are maintaining a long-term
Underperform recommendation on the stock.
Latest Posts on the Zacks Analyst Blog:
The Economy "Twisting" in the Wind
The big news of last week was the Fed coming out with "Operation
Twist." It will sell $400 billion of
short-term t-bills and notes and buy an equivalent amount of
longer-term paper. This is sort of like the Kim Kardashian of
monetary policy actions -- it is inexplicably popular, does not do
much and is all about the back-end.
At the margin it could lower long-term interest rates a little
bit, possibly at the expense of higher short-term rates, but given
the pledge to keep very short rates under 0.25% through 2013, there
will probably be very little effect (even less than on the long
end) on short rates. The downside of this is that it flattens the
yield curve, which hurts bank net interest margins.
It is not like the real problem in the economy is that interest
rates anywhere on the yield curve are too high. Even the 30-year
T-bond is yielding only 2.90%, and the 10-year is at 1.83%. Right
off the bat it looks like the policy has been very successful in
bringing down long-term rates, as long-term treasuries tumbled to
even lower historic lows.
So what will bringing them down by another handful of basis
points accomplish? Next to nothing.
At these levels, it is clear to me that the market is pricing in
not just slower growth, but an outright recession -- either
underway or just about to get underway. If it turns out that we
avoid an outright recession, and the decline in profits that
usually comes with one, then the market should rally from here.
As I noted above, the expectations are starting to come down,
particularly for 2012, but the vast majority of stocks, and every
economic sector is expected to earn more in 2012 than in 2011. The
decline in the revisions ratio is mostly driven right now by the
drying up of new estimate increases, rather than a flood of new
estimate cuts. It is entirely normal at this point seasonally for
overall revisions activity to slow down dramatically.
Not only were stocks down hard, commodities got hit even harder
-- including gold and silver. More importantly, oil prices fell
sharply, which acts as a tax cut for the developed world (not just
the U.S. but also Europe and
Japan as well). That should help
to offset some, but certainly not even close to all, of the current
economic headwinds.
In the Great Recession oil prices plunged from almost
$150 per barrel to the mid
$30's. That helped cushion the blow,
but far from prevented the Great Recession from happening. The
cliff that commodities fell off of this week makes it even clearer
that inflation is not a big problem. If anything, deflation is a
bigger risk right now (another reason for more monetary easing by
the Fed).
I found the decline in copper prices particularly alarming.
Copper is sometimes referred to as the metal with a Ph.D. in
economics. It tumbled to just $3.28
per pound, down an incredible 16% on the week, and off from a
record high of $4.55 back in
February. The good doctor is shouting about a coming economic
slowdown. Commodity related stocks such as Freeport McMoRan
(NYSE: FCX), Joy Global (Nasdaq: JOYG) and Cliffs Natural
Resources (NYSE: CLF) were among the hardest-hit last week.
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.
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