For Immediate Release
Chicago, IL – January 03, 2014 – Zacks.com 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 the Facebook Inc ( FB- Free Report ), Netflix ( NFLX- Free Report ), AOL Inc. ( AOL- Free Report ), Blucora Inc. ( BCOR- Free Report ) and Wyndham Worldwide Corporation ( WYN- Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free .
Here are highlights from Thursday’s Analyst Blog:
Facebook Now a Strong Buy
On Jan 2, 2014, Zacks Investment Research upgraded Facebook Inc ( FB- Free Report ) to a Zacks Rank #1 (Strong Buy). A strong return of 123.9% over the past six months, long-term expected earnings growth rate of 29.5%, impressive third-quarter results and a positive estimate revision trend make Facebook an attractive investment opportunity.
Why the Upgrade?
Facebook reported strong third-quarter results, beating the Zacks Consensus Estimate on both lines. Earnings of 17 cents per share improved considerably from 6 cents in the year-ago quarter. Revenues surged 60.0% from the year-ago quarter to $2.02 billion.
Mobile comprised 49.0% of ad revenues, up from 41.0% in the previous quarter. The sequential increase in mobile ad revenues was driven by an increase in average price per mobile ad, number of mobile users and ads shown per mobile user.
We note that the company has gained significant traction in its mobile ad business within a very short span of time. This, combined with its massive user base and its ability to track personal details over time, makes it a formidable force in the online ad market.
To boost Facebook usage among teenagers, the company decided to allow users in the age group of 13 to 17 to make public posts, which is a positive. The company also announced that it will restrict ad quantity in newsfeed in order to improve user engagement.
Moreover, the new products such as Video ads and Reader are expected to drive top-line growth, going forward. However, higher investments to expand mobile offerings and increasing competition are expected to hurt margins in the near term.
The Zacks Consensus Estimate for fiscal 2013 remained steady at 60 cents per share over the last 60 days. For fiscal 2014, the Zacks Consensus Estimate increased a penny to 87 cents per share over the same time frame.
Other Stocks to Consider:
Other players in the technology industry, which look attractive at current levels, include Netflix ( NFLX- Free Report ), AOL Inc. ( AOL- Free Report ) and Blucora Inc. ( BCOR- Free Report ). All these stocks carry the same Zacks Rank as Facebook.
Wyndham Upgraded to Outperform
On Jan 2, we upgraded our recommendation on leading hotelier, Wyndham Worldwide Corporation ( WYN- Free Report), from Neutral to Outperform following its better-than-expected third-quarter 2013 results and increased earnings guidance.
Why the Upgrade?
Amid a challenging economic environment, Wyndham has succeeded in posting solid top-line growth and higher earnings for the past three quarters, driven by strong performance across all the three operating segments.
The company comfortably surpassed the Zacks Consensus Estimate for both revenues and earnings in the past two out of three quarters. In the recently concluded third-quarter 2013, Wyndham’s earnings grew 25% year over year to $1.41 per share, benefiting from higher top line, improved EBITDA (earnings before interest, taxes, depreciation and amortization) and lower share count. Quarterly revenues also increased 13% year over year. Solid growth in all the operating segments aided the quarterly sales.
Following a better-than-expected performance in the third quarter, the Zacks Rank #2 (Buy) company raised the 2013 earnings guidance for the second time in a row. The company now projects adjusted earnings per share within the range of $3.78–$3.80 up from prior expectations of $3.66–$3.76.
Reasons for the Positive Bias
Along with the strong third-quarter results, the company’s growth story looks attractive. Wyndham is engaged in offering individual and business customers a range of hospitality services across various accommodation alternatives and price ranges through its premier portfolio of 20 global brands.
With the economy beginning to improve gradually, system-wide occupancies in North America appear to be pretty steady and above the prior peak achieved in 2006. According to Smith Travel Research, the U.S. supplies are expected to be nearly 1.1% in 2014. With a low supply growth environment, the company will be able to raise its room rate, going forward.
Wyndham derives a substantial chunk of revenues from its vacation ownership or timeshare business, which has a solid long-term potential. This fee-for-service business reduces capital requirement, resulting in higher free cash flow. The company is focused on rebalancing its portfolio by increasing contributions from fee-for-service businesses, thus introduced a new initiative, Wyndham Asset Affiliation Model (:WAAM) in 2009.
We believe the company’s back-to-back acquisitions, substantial development pipeline and significant international exposure will boost growth, going ahead. Moreover, regular share repurchase activity and dividend distribution helped augment investors' confidence in the company.
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
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