CHICAGO, June 21, 2012 /PRNewswire/ -- Zacks Equity Research highlights Loews Corporation (NYSE:L) as the Bull of the Day and Shaw Communications (NYSE:SJR) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Dell Inc. (Nasdaq:DELL), Hewlett-Packard Company (NYSE:HPQ) and Apple Inc. (Nasdaq:AAPL).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
We have upgraded Loews Corporation (NYSE:L) to Outperform from Neutral on the back of strong first quarter results and initiatives taken to strengthen its hotel business. Loews' first quarter earnings comfortably surpassed the Zacks Consensus Estimate. Higher earnings at CNA Financial and higher parent company investment income were the positives.
Loews aims to strengthen its hotel business by doubling its hotel count within the next three to five years, and expects to triple the net income within the next three years. Elsewhere, Diamond Offshore continues to work on improving its fleet. Boardwalk's increased capacity and expansion projects, strong balance sheet with low leverage and adequate cash also bodes well.
Our six-month target price of $48.00 per share equates to about 15.5x our 2012 earnings estimate. This price target along with the annual dividend of $0.25 per share implies an expected total return of 20.7% over that period, which is consistent with our Outperform recommendation.
We are downgrading our recommendation on Shaw Communications (NYSE:SJR) to Underperform ahead of the release of its third quarter-fiscal 2012 financial results. The company continues to lose basic cable TV customers, reflecting that management has yet to make a turnaround. Since the company already abandoned its wireless venture, it is very crucial for Shaw Communications to execute video offerings properly.
Furthermore, the Media segment is facing continued softness in the Canadian advertisement market. Apart from the video segment, the company markedly improved its customer base for other offerings in the previous quarter. However, this impressive performance is related to massive spending for aggressive promotional activities, resulting in sheer fall of EBITDA margin and free cash flow.
Consequently, the company reduced its previous outlook for fiscal 2012. We do not find any immediate growth catalyst for Shaw Communications and believe the company will continue to face increasing competitive pressures in the near future. We thus downgrade our rating with a price target of $17, based on 11.3x our fiscal 2012 earnings estimate.
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Dell Seals Twin Fed Deals
The world's third largest PC maker Dell Inc. (Nasdaq:DELL) sealed two government deals yesterday.
Under the $100.0 million contract awarded by the National Institute of Allergy and Infectious Diseases (NIAID), Dell will provide information technology (IT) support to researchers. The institute is an agency of the United States Department of Health and Human Services and is responsible for conducting researches to detect and prevent various infectious and allergic diseases.
Dell's technological support will ensure uninterrupted research work, the upgradation of the institute's network infrastructure, supporting high performance computing and ensuring secure data exchange. It will also facilitate the adoption of cloud computing across the institute's IT network for smooth IT management.
In a similar development, the National Institute of Health's (NIH) Information Technology Acquisition and Assessment Center (NITAAC) opted for Dell's services for a period of 10 years. NITAAC is responsible for acquiring various products and services in the IT, defense and health care areas for provision to different government agencies.
This Indefinite Delivery/Indefinite Quantity (ID/IQ) contract has a ceiling value of $20.0 billion. Under this contract, Dell will help in software development, management of IT operations, security of critical infrastructure, as well as other general IT functions.
Dell's service deal-winning spree is likely to continue. Dell's Service segment performed well in the last quarter (up by 4.0% year over year) with the company reporting a solid backlog growth of 15.0% year over year.
We are encouraged by Dell's recent cost cutting initiatives, opportunities in healthcare, cloud computing and the ramp up of Ultrabooks. But concerns over Dell's ability to continue dividend payouts, uncertainty regarding the acquisition of software vendor Quest Software and fears of losing PC market share to Hewlett-Packard Company (NYSE:HPQ) and Apple Inc. (Nasdaq:AAPL) have led to our bearish view for the short term.
Currently, Dell has a Zacks #4 Rank, which implies a short-term Sell rating.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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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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