For Immediate Release
Chicago, IL – February 5, 2010 – Zacks Equity Research highlights Gilead Sciences (GILD) as the Bull of the Day and GameStop Corp. (GME) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Bank of America (BAC), Kroger (KR) and Royal Dutch Shell PLC (RDS.A).
Full analysis of all these stocks is available at http://at.zacks.com/?id=5506
Here is a synopsis of all five stocks:
Bull of the Day:
Gilead Sciences (GILD) reported another strong quarter with earnings per share coming in at $0.90, well above the Zacks Consensus Estimate of $0.82 and the year-ago quarter's earnings of $0.59. For the full year, the company reported a 31% growth in revenues.
We remain optimistic about growth of HIV/AIDS franchise drugs Truvada and Atripla. Earnings over the past few quarters have consistently been above expectations, specifically on strong sales of the HIV franchise products.
Meanwhile, the worldwide panic regarding swine-flu boosted the reported quarter's royalty income, a trend we expect to continue, thanks to increased sales of the anti-viral drug Tamiflu. Given these factors, we upgrade the stock to Outperform.
Bear of the Day:
The video game industry, of which GameStop Corp. (GME) is a part, surged ahead for a number of years but is now grappling with the recession.
Heavy job losses and reduced access to credit markets have led to lower discretionary spending. This has resulted in lower demand for video game consoles and new software. Moreover, the cutthroat competition from big-box retailers is also weighing upon the company's results.
These unfavorable backdrops were evident from the company's sluggish holiday sales season, which prompted management to lower its comparable-store sales and earnings guidance. Thus, we maintain an Underperform rating on the stock until we see an upturn in the company's growth trajectory.
Latest Posts on the Zacks Analyst Blog:
Initial Jobless Claims Up Again
Most of the working and middle class had very little in the way of savings going into this recession as a result of a prolonged period of an extraordinarily low savings rate. What savings they had were mostly in 401(K)s and IRAs. So if they tap them, they not only have to pay income taxes on what they take out, they have to pay a 10% penalty. If they are in their 50’s, they will have very little chance to replenish them before they retire.
If they are underwater on their house, probably the best thing they could do is simply stop paying the mortgage and wait for the sheriff to show up at the door. In many areas people have been able to stay in their houses for over a year after they stopped paying since the banks really don’t want to deal with anymore foreclosures than they have to.
In the absence of the extended benefit claims program, the mortgage/housing/foreclosure/banking problems would be far worse. Thus it is possible to think of the extended benefit program as one more part of the support program for the housing market and the banking industry.
Yes, the program helps the unemployed, but it also indirectly helps Bank of America (BAC) since at the margin more people are continuing to pay on their mortgages. It helps Kroger’s (KR) since more people are able to get their groceries there instead of at the local food bank (when are we going to have a food bank bailout, by the way?).
Shell Disappoints, Freezes Dividend
Energy major Royal Dutch Shell PLC’s (RDS.A) fourth-quarter earnings per ADR (on a current cost of supplies basis), excluding one-time items and gains or losses from inventories, came in at 91 cents, which fell quite some distance short of the year-ago result at $1.27 and also missed the Zacks Consensus Estimate of $1.32.
The negative comparisons were due to poor upstream performance and sharply lower downstream profitability. Revenue remained flat at approximately $81.1 billion.
Royal Dutch Shell’s quarterly miss didn’t come as a major surprise. Though there were no estimate revisions in either direction over the last 7 days, earnings estimates for the company have been trending slightly down over the past few months, with the quarterly Zacks Consensus Estimate going down by 2 cents and 19 cents per share during the last 30 days and 60 days, respectively.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
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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