For Immediate Release
Chicago, IL – March 21, 2014– Zacks Equity Research highlights Harman International Industries, Inc. (HAR-Free Report) as the Bull of the Day and Express Inc. (EXPR-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on eBay Inc. (EBAY-Free Report), Amazon.com Inc. (AMZN-Free Report) and Visa Inc. (V-Free Report).
Here is a synopsis of all five stocks:
Bull of the Day:
Harman International Industries, Inc. (HAR-Free Report) is cashing in on the strong demand for entertainment in our cars. This Zacks Rank #1 (Strong Buy) recently raised fiscal 2014 guidance and is expected to post double digit earnings growth.
Harman manufactures infotainment and audio systems for vehicles worldwide. Its customers include the biggest names in the auto industry including BMW, Mercedes, Audi, Toyota, Chrysler, Volkswagen and GM. 25 million automobiles on the roads are now equipped with Harman audio and infotainment systems.
Consumers want to be connected at all times so infotainment remains a growing market.
Luxury vehicles were the first to get infotainment systems and it remains the most penetrated with about 50% of vehicles now sporting infotainment systems. In mainstream vehicles, the level remains at just 15% to 20% so there is opportunity. Some analysts believe that ultimately there will be 100% penetration of these systems in vehicles.
Harman already commands a large segment of the total infotainment industry with some analysts believing that it has a 25% market share.
Bear of the Day:
It was a rough holiday season for Express Inc. (EXPR-Free Report) as promotions hit hard. This Zacks Rank #5 (Strong Sell) also disappointed the Street when it guided lower for the first quarter of 2014.
Express operates 630 men's and women's specialty apparel stores targeting 20 to 30 year olds in high-traffic shopping malls, urban neighborhoods and lifestyle centers.
On Mar 12, Express reported its fiscal fourth quarter and full year results and missed the Zacks Consensus for the second quarter in row. Earnings were $0.57 versus the Zacks Consensus of $0.59.
Heavier than planned promotions impacted both top-line and margins.
Same-store sales rose 1% whilc e-commerce was a bright spot, gaining 14% to $138.8 million.
Gross margin, however, fell 300 basis points year over year to 32%. In a positive development, inventories were lean ending the quarter and heading into spring.
Icahn’s Latest: Float 20% of PayPal
The latest update in the ongoing cold war between billionaire activist investor Carl Icahn and eBay Inc. (EBAY-Free Report) is that Icahn has advised the giant online marketplace to spin off 20% of PayPal in an Initial Public Offering (IPO). This follows his proposal of a complete spinoff of PayPal with a different management team, which was rejected by eBay.
Icahn‘s earlier proposal of a spinoff fell flat and he doesn’t seem inclined to bow out easily. Therefore, his latest call is not a withdrawal but just a smart modification of his previous offer of separation of the two businesses. Alas, he faces a rejection yet again.
According to Icahn, eBay and PayPal’s association shadows their individual market value. In comparison to companies like Amazon.com Inc. (AMZN-Free Report) and Visa Inc. (V-Free Report), eBay lags both in terms of worth and accomplishments.
Per Icahn, the proposed partial spinoff will increase the equity holder’s base and help them to remain competitive in the long run, thus boosting the progress of both the companies. He also suggested that the two companies should have their individual management teams, thus eliminating the scope for any disagreement between the two businesses.
Carl Icahn owns 0.82% of eBay. The giant online marketplace turned down his proposal as it believes that there will be no additional benefit to either eBay or PayPal if Icahn’s demand is met. On the other hand, the two can, in combination generate the maximum value for shareholders.
The digital payment arm, PayPal, was acquired by eBay in 2002 for $1.5 billion. Since then, it has become the giant marketplace’s engine for growth and the actual reason for investors to hold shares of eBay. As more and more customers prefer online shopping nowadays, the use of this online payment service has increased. Thus, PayPal accounts for a large percentage of eBay’s total revenue.
Additionally, it along with fulfillment services, enables eBay to provide a complete solution to retailers, whether brick-and-mortar or online. The unit thus drives eBay's share value.
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