For Immediate Release
Chicago, IL – January 22, 2014– Zacks Equity Research highlights Natus Medical ( BABY- Free Report) as the Bull of the Day and Texas Industries ( TXI- Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Nintendo ( NTDOY- Free Report ), Microsoft ( MSFT- Free Report ) and Sony ( SNE- Free Report ).
Here is a synopsis of all five stocks:
Bull of the Day:
Earnings estimates continue to rise for Natus Medical ( BABY- Free Report) after management delivered bullish guidance for 2014. It is a Zacks Rank #1 (Strong Buy) stock.
While shares might seem expensive at first glance at more than 20x forward earnings, relative to its peers and its growth projections, it seems reasonably priced. If Natus can continue to deliver better-than-expected financial results, then there is still plenty of upside left in the stock.
Natus Medical Incorporated provides healthcare products used for the screening, detection, treatment, monitoring, and tracking of common medical ailments in newborn care, hearing impairment, neurological dysfunction, epilepsy, sleep disorders, and balance and mobility disorders. Its products address two primary end markets: Neurology and Newborn Care.
On January 13, Natus Medical announced bullish guidance for 2014.
Bear of the Day:
Since Texas Industries ( TXI- Free Report) reported its fiscal 2014 second quarter results, consensus estimates have fallen for both this year and next. It is a Zacks Rank #5 (Strong Sell) stock.
Shares of Texas Industries do not look cheap at 78x forward earnings. Although the company may be a buyout target, investors should consider waiting for the company's earnings momentum to improve before buying the stock.
Texas Industries, Inc. supplies cement, aggregate and consumer product building materials for all types of construction. Its primary markets are Texas and California.
Texas Industries reported its fiscal 2014 second quarter results on January 8. Adjusted earnings per share came in at -35 cents, missing the Zacks Consensus Estimate of -22 cents. It was the company's second straight earnings miss.
Net sales rose 25% to $208.9 million, but this was well below the consensus of $222.0 million. The company cited a number of "non-recurring and short-term factors" that negatively impacted its results, including "[a]bnormal periods of inclement weather in Texas".
Nintendo Plunges on Outlook Cut
Video game consumers’ ongoing transition to smartphones and tablets as the favored hardware platform continues to negatively impact Nintendo ( NTDOY- Free Report ). The failure of Wii U coupled with lower expectation for 3DS dragged down shares by 17.0% ($3.06) to close at $14.90 on Jan 17, 2014.
Nintendo recently revised down the full-year 2014 guidance citing lower Wii U and 3DS sales in the international markets. Despite a price cut prior to the holiday season, Wii U failed to gain any traction in the U.S. and Europe. Management slashed unit sales expectation by 70.0% to 2.8 million from an earlier projection of 9 million.
Despite being in the market for a much longer period than Microsoft’s ( MSFT- Free Report ) and Sony’s ( SNE- Free Report ) next-generation consoles, Wii U’s failure indicates growing preference for smartphones and tablets as well as lack of compelling gaming titles on the platform.
Since Nov 2012, Nintendo sold 5.3 million units of Wii U, compared with Sony’s 4.4 million PlayStation 4 and Microsoft’s 3.1 million Xbox One, which were released in Nov 2013. The fast growth in both the consoles was also driven by the availability of premier titles such as Battlefield 4 and Call of Duty: Ghosts.
Nintendo’s flagship 3DS sales also faltered by a significant margin in the U.S. and Europe, partially offset by strong growth in Japan. Per NPD data, 3DS was the top-selling hardware platform (in terms of unit) in U.S. in 2013. However, actual sales were well short of management’s expectations.
In Europe, France was the only country where 3DS reported strong sales. As per Nintendo, sales in other countries lagged management’s expectations by a massive range. Nintendo revised down 3DS unit sales expectation to 13.5 million from a prior outlook of 18.0 million.
These revisions are expected to negatively impact full-year 2014 revenues by 330 billion yen. Higher manufacturing costs, increasing advertising expense (up by 8 billion yen) and research & development expense (up by 15 billion yen) will negatively impact operating profit by 35 billion yen.
The dismal performance of Wii U has made its future uncertain. We believe that the comparatively better performance by 3DS might compel Nintendo to put Wii U on the backburner.
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