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Atmel Corp., Abode Systems, ConAgra Foods, Ralcorp and Bank of America highlighted as Zacks Bull and Bear of the Day
By: PR Newswire
Jan. 16, 2013 09:30 AM
CHICAGO, Jan. 16, 2013 /PRNewswire/ -- Zacks Equity Research highlights Atmel Corp. (NYSE:ATML) as the Bull of the Day and Adobe System (NYSE: ADBE) as the Bear of the Day. In addition, Zacks Equity Research provides analysis ontheConAgra Foods Inc. (CAG), Ralcorp Holdings Inc. (RAH) and Bank of America Corp. (BAC).
Here is a synopsis of all five stocks:
Atmel Corp. (ATML) reported strong third quarter results with healthy earnings that exceeded the Zacks Consensus Estimate. The company is investing more in its core microcontroller business to augment its margins and overall growth going forward. Fast-growing touchsensing technology is one of the major growth drivers for Atmel's microcontroller business.
The company's strong relationships with Nokia, Motorola, HTC and Samsung are also expected to bolster its business in the future. We are changing our long-term recommendation on the stock from Neutral to Outperform based on the long-term growth perspective.
The stock is currently trading at a P/E multiple of 27.2x, identical with the industry average and the S&P 500 multiple of 15.0x. Our target price of $8.50 reflecting a P/E of 35.4x factors aligns with our Outperform recommendation.
Adobe Systems' (ADBE) fourth quarter earnings exceeded the Zacks Consensus Estimate on higher revenue. However, the subscription service will hurt Adobe's revenue growth in the short term as it brings in revenues on a monthly basis instead of an upfront payment.
Hence, we are downgrading our recommendation on Adobe shares from Neutral to Underperform. Adobe lowered its fiscal 2013 guidance from $4.4 billion to $4.1 billion, considering the faster uptake the of Creative Cloud subscription model.
Also, lower end-market demand will impact earnings in the near term. We believe that this is the result of weak global economic conditions, the unwillingness of the user to spend on the modified Acrobat software, among other things.
ConAgra Goes Ahead with Ralcorp Plans
ConAgra Foods Inc. (CAG) made an announcement today acknowledging the receipt of the "no-action letter" from the Canadian Competition Bureau. The letter indicates that the Commissioner of Competition does not intend to stand in the way of ConAgra's acquisition of Ralcorp Holdings Inc. (RAH), announced in late November last year. This declaration frees the company from one of the criteria for the completion of the acquisition.
In another press release, the company reported the outcome of its cash tender offer for certain Ralcorp Notes, announced in early January 2013. As on the early tender date, January 14, 2013, the Ralcorp Note holders tendered a total of 93.9% or $281.7 million and 96.2% or $433.0 million of 4.950% Notes due August 15, 2020 and 6.625% Notes due August 15, 2039, respectively.
The holders who have tendered their Notes on the above date are eligible for an early tender premium on the amount of Notes. However, the holders who tender their Notes after the Early Tender period but before the Settlement date of January 29, 2013, will be eligible to receive the Exchange Consideration only.
BofA Merrill Lynch, a wing of Bank of America Corp. (BAC), is the exclusive dealer manager and solicitation agent for the Tender Offers and Consent Solicitations.
The above settlement is done in connection with ConAgra's proposed acquisition of Ralcorp, which we believe will lead the company to better profitability due to cost synergies. Since the acquisition announcement date of Ralcorp, ConAgra has experienced a 10% hike in its stock price.
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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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
SOURCE Zacks Investment Research, Inc.
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