The Zacks Analyst Blog Highlights: Automatic Data Processing, Research In Motion, Apple, Google and Enterprise Products Partners



For Immediate Release

Chicago, IL – May 31, 2012 – announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Automatic Data Processing (ADP),Research In Motion (RIMM), Apple (AAPL), Google (GOOG) and Enterprise Products Partners, L.P. (EPD).  

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Here are highlights from Wednesday’s Analyst Blog:

The Pain Remains in Spain


A credit rating downgrade of the country on an otherwise slow-news day will not help either. The domestic economic calendar is on the thin side today, as most of the top-tier economic reports are coming out on Thursday and Friday.

The market is keenly waiting for the May non-farm payroll report coming out Friday morning and the preview of that report in Thursday’s reading from Automatic Data Processing (ADP), the payroll processor.
But the spotlight today will firmly remain on Spain, whose government announced the other day a €19 billion bailout of the troubled bank Bankia. The government appeared to be banking on funds from European Central Bank (:ECB) for recapitalizing the bank, but stepped back from that move after resistance from the central bank. The government now plans to raise the funds through the markets by auctioning treasury bonds, but its ability to achieve that goal at competitive rates is becoming increasingly difficult given the persistent uptrend in bond yields.

The rating downgrade by Egan-Jones Rating of the country’s sovereign credit profile into junk category is not helpful to that goal either. Bottom line, Spain is in the headlines for all the wrong reasons, and that’s not good for the market today.   
In corporate news, shares of BlackBerry maker Research In Motion (RIMM) will be in focus today after the company pre-announced a surprise loss in the current quarter on Tuesday. The company also announced the hiring of investment bankers to help them sort out ‘strategic alternatives.’ Given the dire straits the company is in, it is inconceivable that any existing industry player will step up to buy them out.

RIMM is coming out with a new version of BlackBerry this year, but the company has been fast losing ground to competing products like Apple’s (AAPL) iPhone and handsets that use Google’s (GOOG) Android operating system. Earnings estimates for the current quarter have been steadily coming down, but the company was still expected to report positive earnings of 41 cents for the quarter, which has come down almost 40% over the last three months.



Enterprise Products Lowered to Neutral


We have downgraded our recommendation for Enterprise Products Partners, L.P. (EPD) to Neutral from Outperform following its first quarter earnings release. In spite of reporting decent numbers, the decrease in segmental gross margin and macro risks compelled the downgrade.

Enterprise started the year on a positive note relating to all its segments, but for Petrochemical & Refined Product Services and Offshore Pipelines & Services. The gross margin of its Petrochemical & Refined Products segment decreased almost 13% year over year in the first quarter, primarily due to downtime and maintenance expenses along with operational issues at the octane enhancement facility.

Again, Offshore Pipelines & Services also saw a decrease in gross margin in the first quarter. The segment continues to be adversely effected by an overall decrease in offshore natural gas and crude oil pipeline volumes owing to lesser exploration and development operations in the Gulf of Mexico region. This was mainly because of the ongoing federal regulatory issues regarding offshore drilling.

Enterprise Products Partners also remains susceptible to a number of global macro issues, which include sovereign debt risks, defaults on sovereign credits, and changes in U.S. monetary and fiscal policies as well as tax policy. Importantly, an economic slowdown could impact demand and the price of crude oil, which in turn could hurt Enterprise's margins in its natural gas liquid (NGL), natural gas and other businesses.

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Read the analyst report on ADP

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