The Zacks Analyst Blog Highlights: Leap Wireless International, Verizon Communication, AT&T, Royal Dutch Shell and Quicksilver Resources

Zacks


For Immediate Release

Chicago, IL – September 26, 2012 – 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 Leap Wireless International Inc. (LEAP), Verizon Communication Inc. (VZ), AT&T Inc. (T), Royal Dutch Shell plc (RDS.A) and Quicksilver Resources Inc. (KWK).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Tuesday’s Analyst Blog:

 

Moody’s Upgrades Leap’s Outlook

 

Rating agency, Moody’s Investor service has upgraded its outlook on Leap Wireless International Inc. (LEAP) from negative to stable on the back of the prepaid carrier's plan to trim down its debt.

Leap Wireless’s wholly-owned subsidiary Cricket Communications Inc. has announced that it has arranged a term loan facility of $400 million to pay back its existing 10% senior notes of $300 million due on 2015, this is attributable for the raised outlook. The remaining proceeds from the loan will be used for general corporate purposes.

Recently, Leap Wireless declared dismal second-quarter 2012 results, wherein both revenue and EPS fell short of the Zacks Consensus Estimates. The slump in quarterly result was buoyed by increased churn rate. Leap currently holds Moody’s B2 rating, which is five notches above the junk category.

To transcend this tough situation, the company is trying to reduce its operating costs other than considering asset sale options. The company has declared to reduce its capital spending by 13% for 2012. We believe controlled capital spending coupled with the debt reduction effort will help the company to improve operation, which in turn will help the company to improve its cash flow situations.

The pay-as-you-go carrier has vowed to offer the latest iPhone 5 from September 25, 2012. It will be the first company to launch prepaid iphone5 and will be mainly targeting the young customers. Though it faces stiff competition from the likes of Verizon Communication Inc. (VZ) and AT&T Inc. (T), we believe its lower tariff plan will mainly attract the low-end customers of these national carriers. However, if the company’s strategic initiative fails to deliver it could face further cut in ratings from Moody’s.  

The current Zacks Consensus Estimate for Leap Wireless International Inc. is pegged at ($0.76) for the third quarter of 2012 with a growth rate estimate of 15.33%. For 2012, the Zacks Consensus Estimate stands at ($3.84) with a growth rate of 6.49% while for 2013, the Zacks Consensus Estimate stands at ($3.11) with a growth rate of 19.12%.

Recommendation:

We retain our long-term Neutral recommendation on Leap Wireless Inc. Currently, it has a Zacks #3 Rank, implying a short-term Hold rating.

 

Shell in Asset Development Deal

 

Royal Dutch Shell plc (RDS.A) – through its affiliate SWEPI LP – entered into an asset development agreement with Fort Worth, Texas-based Quicksilver Resources Inc. (KWK).

Per the terms of the joint venture signed between the two aforesaid companies, they will be involved in developing their oil and gas holdings spanning across the Sand Wash Basin in Northwest Colorado. The companies are expected to cover more than 850,000 acres in the basin and set up an Area of Mutual Interest ("AMI").

Each company will transfer 50% of its working interest in the majority of their acreage in the Sand Wash Basin to the other party. This will also endow each company with the right to 50% stake in any acquisition within the AMI.

Quicksilver will also be paid an undisclosed compensatory amount from SWEPI for its large share in acreage contribution compared to Shell.

SWEPI, subject to agreement, will likely act as the operator for most of the property, while Quicksilver will continue operating wells drilled prior to the agreement along with other assigned lands.

The deal – awaiting customary rules and conditions, is expected to be closed by the end of 2012.

The Hague-based Royal Dutch Shell owns one of the largest integrated oil and gas businesses in the world. Shell, currently retains a Zacks #3 Rank that translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.

We believe that Shell owns a strong and diversified portfolio of global energy businesses that offer attractive long-term growth opportunities. The group’s strong inventory of development projects and increased capital expenditures should facilitate volume growth over the long haul.

However, the company is particularly susceptible to its high exposure to the downstream business, its major natural gas focus, as well as lofty capital spending, which may result in reduced returns going forward.

 

 

 

 

Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5515.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Follow us on Twitter: http://twitter.com/zacksresearch

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Media Contact
Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

http://www.zacks.com

Read the analyst report on LEAP

Read the analyst report on VZ

Read the analyst report on T

Read the analyst report on RDS.A

Read the analyst report on KWK

Zacks Investment Research



More From Zacks.com
View Comments (0)