For Immediate Release
Chicago, IL – March 26, 2014– Zacks Equity Research highlights St. Joe Company (JOE-Free Report) as the Bull of the Day and Endologix (ELGX-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Netflix, Inc. (NFLX-Free Report), Apple (AAPL-Free Report) and Comcast (CMCSA-Free Report).
Here is a synopsis of all five stocks:
Bull of the Day:
The St. Joe Company (JOE-Free Report) is a real estate developer with approximately 185,000 acres of land, concentrated primarily in Northwest Florida. Over the years, the company has developed successful residential and commercial projects and related infrastructure and is currently focused on growing its resorts, leisure and leasing operations.
JOE has five reportable operating segments: (1) residential real estate, (2) commercial real estate, (3) resorts, leisure and leasing operations, (4) forestry and (5) rural land. During FY 2013, about 39% of revenues came from resorts, leisure and leasing operations.
JOE reported its fourth quarter results on February 17. The company had net earnings of $0.5 million including a non-cash impairment charge of $5.1 million. Excluding charges, earnings were $0.04 per share, per Zacks. Results were better than the previous-year quarter as well as the Zacks Consensus Estimate of a loss of a cent per share.
Revenues increased 50.0% to $33.9 million, ahead of the Zacks Consensus Estimate of $25.0 million. Residential real estate, commercial real estate, as well as resorts, leisure and leasing segments delivered a solid performance but the forestry segment remained weak with no notable rural land deals in 2013.
In November, the company announced the sale of approximately 383,834 acres of non-strategic timberland. According to the management “this transaction will help the company concentrate on its core business activity of real estate development”.
Bear of the Day:
Headquartered in Irvine, California, Endologix (ELGX-Free Report) develops, manufactures, markets and sells minimally invasive treatments for vascular diseases. Its main product is an endoluminal stent graft system used for the treatment of abdominal aortic aneurysms (:AAA).
The company reported its Q4 results on February 27. Global revenue for the quarter was up 21% from the prior year quarter but sales were up only 8% in the US. According to the management, softness was mainly due to a pullback from some of the centers that didn’t get selected for the Nellix IDE trial, the delay in the Ventana program and increased competitive activity.
GAAP net loss was $3.4 million or $0.05 per share in the quarter compared to a net loss $6.5 million or $0.11 per share for the fourth quarter of 2012.
The company expects Q1 2014 sales to be sequentially down from Q4 2013, due to weak start to the year. They also revised down their guidance for FY 2014 sales growth to an 11% to 15% range.
After disappointing guidance, estimates for the company have moved downwards. Zacks Consensus Estimates for the current year and next year are now down to ($0.24) per share and ($0.04) per share respectively, from ($0.01) per share and $0.27 per share, 30 days back.
Declining estimates sent ELGX to a Zacks Rank #5 (Strong Sell).
Netflix Down on Apple-Comcast Deal News
Shares of Netflix, Inc. (NFLX-Free Report) plunged $27.09 (6.7%) to $378.90 on Mar 24, 2014, on the heels of a probable Apple (AAPL-Free Report)–Comcast (CMCSA-Free Report) partnership, which is expected to hurt the streaming service provider’s subscriber growth.
Reportedly, Apple is looking for an exclusive cable line from Comcast, which will allow it to bypass the “last mile” congestion in the cable provider’s public line. This will help Apple deliver high quality video-on-demand and live TV through its set-top box to Comcast customers.
Netflix recently entered into an agreement with Comcast to ensure smooth transmission of its content, after customers complained of declining net speed (in Comcast network) that affected the quality of shows. Reportedly, Netflix is paying millions of dollar to enhance the net speed through Comcast’s public line.
An exclusive arrangement between Apple and Comcast will drastically improve the viewing quality of shows for Comcast’s customers, which they will stream through Apple TV. This improving engagement may prompt some customers to discard Netflix’s service going forward.
However, the fear that Netflix will lose substantial customer base due to the Apple-Comcast partnership is overblown in our view. Netflix’s ever-expanding content library is its primary strength. The company’s focus on producing original shows that increases its own content is a major positive in this regard.
Besides offering iTunes content, Apple TV also offers Netflix along with Hulu and Google’s YouTube. A possible deal with Comcast will help Apple to sell its set-top boxes much faster.
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