For Immediate Release
Chicago, IL – November 27, 2013 – Zacks Equity Research highlights Impax Laboratories ( IPXL- Free Report ) as the Bull of the Day and PHH Corp ( PHH- Free Report ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on the Hewlett-Packard Corp. ( HPQ- Free Report), IBM ( IBM- Free Report) and Microsoft ( MSFT- Free Report).
Here is a synopsis of all five stocks:
Bull of the Day:
Headquartered in Hayward, CA, Impax Laboratories ( IPXL- Free Report ) is a technology-based specialty pharmaceutical company. The company has a balanced business model targeting sustainable generic and specialized brand markets.
The company reported third quarter 2013 adjusted net income of $16.6 million, or $0.25 per diluted share, compared to adjusted net income of $33.0 million, or $0.48 per diluted share in the prior year period. Earnings were significantly better than the Zacks Consensus Estimate of a loss of $0.06 per share.
Total revenues for the quarter were $132.6 million, down 8.9% year over year, but well ahead of the Zacks Consensus Estimate of $109 million. Global Pharmaceuticals revenues increased due to sales of new generic products launched this year, partially offset by lower sales of attention deficit hyperactivity disorder product, Adderall XR.
Revenues from the Pharmaceuticals division were down 61.8% year over year, hurt by lower demand for Zomig tablets and ZMT products due to generic competition. The balance sheet position remained strong balance sheet with approximately $437 million in cash and cash equivalents and no debt.
The company increased their full year gross margin guidance to approximately 50% from its prior guidance of mid- to upper 40% range.
Bear of the Day:
PHH Corp ( PHH- Free Report ) delivers outsourcing solutions in private-label mortgage originations and fleet management through its subsidiaries, PHH Mortgage and PHH Arval.
PHH Mortgage provides outsourced solutions to financial institutions, real estate companies, credit unions, corporations and government agencies. PHH Mortgage is one of the top 10 originators of retail residential mortgages in the country. They also provide home financing directly to consumers.PHH Arval is a fleet management services provider for corporate clients and government agencies throughout the US and Canada. They currently have over 580,000 automobiles and trucks under management in both sales and service fleets.
PHH reported it third quarter results on November 6, 2013. The quarter resulted in a net loss of $52 million or $0.90 per basic share. Net operating earnings after excluding one-time items were ($0.12) per share, substantially short of the Zacks Consensus Estimate of $0.24 per share.
While the fleet business delivered a 14% increase in segment profit over the prior year; the mortgage business generated a loss due to lower total loan margins, lower lock volume, and severance costs. Mortgage production earnings decline was driven by higher interest rates, declines in refinancings and a continued mix shift to fee for service originations.
Tangible book value per share declined to $27.33 at September 30, 2013, down 3% from $28.14 at June 30, 2013.
H-P Posts Beat on Earnings & Sales
OK, so it's a one-cent beat, but still. Hewlett-Packard Corp. ( HPQ- Free Report), the computer manufacturing giant, posted $1.01 per share in its fiscal Q4 earnings after the bell Tuesday, on revenues of $29.1 billion. This topped the Zacks consensus estimates of $1.00 and $28.0 billion in the quarter.
This is clearly welcome news to after-market traders. After selling off a few pennies in regular Tuesday trading Hewlett-Packard shares are up roughly 8% as of now in the after-market. Not too shabby considering HPQ is up nearly 77% year-to-date even before this bull run. Also consider that both top and bottom lines are down year over year -- 13% on earnings and 3% on sales.
H-P is still going through a multi-year process of righting the ship, and CEO Meg Whitman cited "improved execution" and "strong cost management" to post the company's third positive earnings surprise in the past four quarters. Whitman mentioned also the recovery at H-P remains "on track."
Also consider this company is trading at a 12-month-trailing multiple under 5x earnings currently; seemingly, this is a good value play for investors encouraged by the positive surprises.
But with Enterprise Services and Software sales each down 9% year over year, and Financial Services down another 6%, plenty of questions remain as to the long-term trajectory of H-P. These are generally the same issues currently facing IBM ( IBM- Free Report) and Microsoft ( MSFT- Free Report), in that the dwindling PC market must be dealt with by growing elsewhere. But these companies are behemoths; they're aircraft carriers -- turning them around is no walk in the park.
Enterprise spending will be a major factor going forward, of course, but the biggest challenge for H-P will be its ability to gain a foothold in new technology usages. Currently, Microsoft is doing more in cloud computing, for instance.
Analysts had been mixed in Q4 and fiscal 2013 estimates. H-P retains a Zacks Rank #3 (Hold) as well as a longer-term Neutral recommendation.
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