The Zacks Analyst Blog Highlights: VeriSign, AT&T, Qihoo, Verizon and Symmetry Medical

Zacks

For Immediate Release
 
Chicago, IL – March 20, 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 VeriSign (VRSN-Free Report), AT&T Inc. (T-Free Report), Qihoo (QIHU-Free Report), Verizon (VZ-Free Report) and Symmetry Medical, Inc. (SMA-Free Report).
 
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Here are highlights from Wednesday’s Analyst Blog:

Will the NTIA’s Decision Hurt VeriSign?

The U.S. government’s plan of relinquishing control of the system for assigning website addresses is expected to hurt VeriSign’s (VRSN-Free Report) growth prospects going forward.

The National Telecommunications and Information Administration (:NTIA) intend to transfer key domain name functions to the global multi-stakeholder community. As a first step, it has asked the Internet Corporation for Assigned Names and Numbers (:ICANN) to bring together all global stakeholders to develop a proposal for the transition.

VeriSign, which operates the infrastructure for the .com, .net and.gov, stated that the NTIA decision will not affect its operations in any way as its Internet functions are much different from those included in the announcement.

Further, the company clarified that functions performed by VeriSign that come under the purview of the NTIA announcement have been performed as a community service spanning three decades without compensation and hence their non-renewal will not affect profitability going forward.

Nevertheless, this announcement seems to be a major setback for VeriSign. It is likely to be an overhang on the registration business, which is a major contributor of revenues (contributed nearly $1.0 billion revenue in 2013).  We believe that the less U.S. control will increase risk for VeriSign as it will reduce company’s ability to renew .com and .net contract price as per its own terms.  

Nevertheless, the whole process of relinquishing control will take some-time. Hence, we believe that it will have no significant negative impact on VeriSign’s near term results.

We believe that increasing domain name registration, the renewal of the .com contract and the price hike in .net domain name will boost VeriSign’s top-line in the near term. Additionally, VeriSign has significant growth opportunities from its network security products as Distributed Denial of Service (DDoS) attacks continue to grow.

However, the negative impact of search engine adjustments on domain monetization and increasing operating expenses related to the .com contract renewal remain the primary headwinds in the near term. Moreover, significant competition from AT&T Inc. (T-Free Report), Qihoo (QIHU-Free Report) and Verizon (VZ-Free Report) in the network intelligence and availability (:NIA) segment remains a major concern.

Currently, Verisign has a Zacks Rank # 2 (Buy).

Symmetry Medical Sheds Light on UK Plant Fire

Symmetry Medical, Inc. (SMA-Free Report) – a leading manufacturer of medical device solutions and surgical instruments – has confirmed reports published earlier regarding the outbreak of a minor electrical fire at its Sheffield, UK manufacturing plant on Mar 8, 2014.

Luckily, the fire remained confined to the temporary Acid Shop at the plant, damaging only 3 tanks out of a line of 9. All other sections of the plant remained out of the fire’s reach. As per the local authorities’ confirmation, the structure of the temporary Acid Shop remains unaffected. With the fire brought under control promptly, none of the Symmetry Medical employees or first responders was injured in the incident.

Symmetry's shares, which are down around 7% over a year, gained 3.4% yesterday to close at $10.23. The Acid Shop functions alongside the forging operation of Symmetry Medical at the Sheffield plant.

After forging is done, parts are immersed in acid baths to remove materials from the forging process. Management believes that though operations will not be hampered at the plant, throughput may be delayed owing to the ongoing validation of the new tanks.

With refurbishment work already in process, the line of tanks should be repaired, validated and rendered operational by early April. Management projects little financial impact other than revenues of around $1 million being deferred from the first quarter to the second quarter of 2014.

According to Thomas J. Sullivan, President and CEO of Symmetry, it was the joint effort of Symmetry Medical’s security team and the local fire fighters that let the fire remain contained to one of the lines in the Acid Shop and did not allow it to spread further.

On Mar 10, management notified Sheffield customers that they are working to minimize customer disruption through SMA's business continuity plan. Moreover, all the customers will continue to receive timely updates from the Symmetry Medical team. The line is expected to be back in service within a relatively short period, pending any necessary customer validation.

Symmetry Medical currently holds a Zacks Rank #3 (Hold).

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