For Immediate Release
Chicago, IL – March 27, 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 Lions Gate Entertainment ( LGF), Cal-Mine Foods ( CALM), Hewlett-Packard ( HPQ), DryShips Inc. ( DRYS) and Ocean Rig UDW Inc. ( ORIG).
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Here are highlights from Monday’s Analyst Blog:
This Week's Market Movers
The market appeared to lose its momentum last week for the first time this year as global growth worries overtook optimism about the U.S. economic scene. Even so, the pullback is modest relative to the gains thus far this year, and could easily get reversed given this week’s potentially market-moving releases. The more likely course for the market is a period of consolidation over the coming days ahead of the coming earnings season that is now only a couple weeks away.
This week’s releases start with Pending Home sales that come out after the open today and is expected to show an improvement over the preceding month. Last week’s New Home Sales and Housing Starts misses aside, the housing sector is showing unmistakable signs of stabilization. The most important driver of this favorable trend is the ongoing labor market improvement and the enhanced buying power that comes with it.
We should see the impact of the labor market developments in Tuesday’s Consumer Confidence reading from Conference Board and Friday’s measure from the University of Michigan. Wednesday’s Durable Goods report is expected to show a significant improvement from January’s decline.
Friday’s Personal Income & Outlays report has the potential to cause positive revisions to current quarter GDP estimates. The final read on the fourth quarter 2011 GDP report on Thursday could be significant for the same reason as it could cause upward revisions to the current quarter growth estimates.
The key component in the Thursday GDP report will be Personal Consumption Expenditures or consumer spending. Upward revision to fourth quarter consumer spending would show greater momentum coming into the current quarter than initially expected, likely causing growth expectations to go up.
In corporate news, shares of Lions Gate Entertainment ( LGF) will be in the spotlight following the weekend success of its ‘Hunger Games’ movie. Cal-Mine Foods ( CALM), the producer and marketer of eggs, came ahead of EPS expectations but missed on revenue and indicated continued feedstock cost pressures. In other news, Hewlett-Packard ( HPQ) announced a 10% increase in quarterly dividend.
DryShips Flourishing via Ocean Rig
DryShips Inc. ( DRYS) is gradually converting itself into an ultra-deep water drilling company rather than continuing as a simple drybulk cargo operator. The acquisition of Ocean Rig UDW Inc. ( ORIG) turned out to be a major positive. Though DryShips’ legacy drybulk shipping cargo division and newly formed oil tanker division continued their pathetic performances, the company’s majority owned deepwater oil drilling unit Ocean Rig continued to support DryShips’ overall financials.
Recently, Ocean Rig has won a new drilling contract in West Africa. The contract is for 84 days and has an estimated backlog of $67.5 million. This contract can be extended further for another well for an additional duration of about 40 days. The offshore drilling division continues to flourish buoyed by high oil prices, rising expenditures from oil companies and success in ultra deep water oil field discoveries. At the end of 2011, Ocean Rig has $2.3 billion of order backlog.
Ocean Rig’s asset and contract portfolio diversified DryShips’ assets and sources of cash flow. Furthermore, Ocean Rig’s operational expertise provided DryShips with the necessary platform to compete in the ultra-deep water drilling sector. In the previous quarter, total revenue of Ocean Rig was approximately $237.7 million, up by an enormous 132.3% year over year. We believe the demand for deep water drilling services will boost in near future attributable to the discovery of several large deep water oil reservoirs. Ocean Rig has high quality drillship fleets, which will enable oil explorers to operate even under harsh environment.
On October 5, 2011, DryShips completed partial spin-off of the Ocean Rig division for the first time. The company currently holds 73.9% share of Ocean Rig. Management announced that in the near future, the company may further reduce its stake to improve the parent company’s cash position.
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