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Kraton Performance Polymers, XO Group, Baidu, Google and Qihoo 360 highlighted as Zacks Bull and Bear of the Day

Zacks Equity Research

For Immediate Release

Chicago, IL – March 27, 2014– Zacks Equity Research highlights Kraton Performance Polymers (KRA-Free Report) as the Bull of the Day and XO Group (XOXO-Free Report)  as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Baidu (BIDU-Free Report), Google (GOOG-Free Report) and Qihoo 360 (QIHU-Free Report).
Here is a synopsis of all five stocks:

Bull of the Day:

After reporting 6 earnings misses in the span of 7 quarters in 2012 and 2013, Kraton Performance Polymers (KRA-Free Report) has delivered 2 straight earnings beats. This has prompted a significant turnaround in earnings momentum, sending the stock to a Zacks Rank #1 (Strong Buy).

The valuation picture looks attractive too with shares trading below their peers on almost every relative valuation multiple. This, combined with strong earnings momentum, could propel shares significantly higher over the next few months.

Kraton Performance Polymers produces styrenic block copolymers ('SBCs') and other engineered polymers and markets its products under the Kraton, Cariflex, and NEXARTM brands.

Its products are found in many everyday applications, including personal care products such as disposable diapers and the rubberized grips of toothbrushes, razor blades and power tools, as well as in adhesives, sealants and coatings and paving and roofing products. The company also produces Cariflex isoprene rubber and isoprene rubber latex, which are used as substitutes for natural rubber and natural rubber latex in products like surgical gloves and condoms.

The majority of its revenue comes from overseas.

Kraton reported better-than-expected Q4 results on February 26. Adjusted earnings per share came in at 8 cents, beating the Zacks Consensus Estimate calling for a loss of 15 cents. It was also a significant increase from the 22 cent loss it reported in the same quarter last year.

Bear of the Day:

XO Group (XOXO-Free Report) delivered disappointing fourth quarter results on March 13. Since then, analysts have revised their estimates for both 2014 and 2015 significantly lower, sending the stock to a Zacks Rank #5 (Strong Sell).

Shares of XO Group have sold off considerably since the Q4 report, but the stock still does not look like at a value at 45x forward earnings. Investors should consider avoiding the stock until its earnings momentum turns around.

XO Group owns websites focused on weddings, pregnancy, and everything in between. Its portfolio includes The Knot, The Nest, The Bump, and Ijie.com.

XO Group reported its fourth quarter results on March 13. Adjusted earnings per share came in at a loss of 3 cents, which was well below the Zacks Consensus Estimate calling for earnings of 11 cents per share.

Additional content:

Baidu Down 13.3% YTD – Time to Buy?

Baidu (BIDU-Free Report) is well-known as the Google (GOOG-Free Report) of China given its 73% share of combined mobile and PC search traffic (according to research firm Analysys International). So why are prices declining?

While Baidu most certainly gained from Google’s exit from China, several home-grown players are now proliferating, the most significant of which is currently Qihoo 360 (QIHU-Free Report). Qihoo entered the search market by leveraging its security user base of more than 450 million.

The company was already offering its Internet security products for free and generating revenue through advertisements. Its search engine So.com followed the same model and so was immediately successful, pushing it to the number two spot. Qihoo is particularly strong on the mobile platform, where it has a number of popular products.

Baidu is the market leader by far and the company is now focusing on the mobile segment, because this area is likely to see much stronger growth. The company has built products targeting three specific areas in mobile search, app distribution and location-based services. Management stated that at the end of the last-reported quarter, it had leadership positions in all three.

On the flip side, the company saw SG&A expenses increase 107% in 2013, driven primarily by the promotion of its mobile products. And investment for growth does not end here -- it is expected to remain particularly strong through 2014. Although sales will increase this year, management intends to plough back all additional profits into promotion in order to capture further market share in mobile.

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