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The Zacks Analyst Blog Highlights: Cincinnati Financial, Nokia, Alcatel-Lucent, LM Ericsson and Cisco Systems

Zacks Equity Research

  For Immediate Release

Chicago, IL – September 30, 2013 – 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 Cincinnati Financial Corp. ( CINF- Free Report), Nokia Corp. ( NOK- Free Report), Alcatel-Lucent S.A. ( ALU- Free Report), LM Ericsson AB ( ERIC- Free Report) and Cisco Systems Inc. ( CSCO- Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free .

Here are highlights from Friday’s Analyst Blog:

Cincinnati Financial: A Strong Buy
On Sep 25, Zacks Investment Research upgraded Cincinnati Financial Corp. ( CINF- Free Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Cincinnati Financial has witnessed rising earnings estimates on the back of strong second-quarter 2013 results. Moreover, this property and casualty insurer delivered positive earnings surprises in the last 4 quarters with an average beat of 72%.

Cincinnati Financial reported second-quarter results on Jul 26. Non-GAAP earnings per share came in at 61 cents, surpassing the Zacks Consensus Estimate of 32 cents by 90.6% and year-ago earnings by more than three fold.

Earnings were primarily aided by increased underwriting profits from each of the three property casualty segments.

Revenue for Cincinnati Financial improved 8% year over year driven by higher premiums earned (up 9% year over year). In addition, total benefits and expenses for Cincinnati Financial in the quarter decreased 3.5%.

At quarter-end, debt to capital ratio improved 50 basis points to 13.6% from 14.1% at year-end 2012. As of Jun 30, 2013, book value per share of Cincinnati Financial was $34.83, up 4% from Dec 31, 2012.

In August, the board also approved a 3.1% hike in its quarterly dividend to 42 cents per share. Its dividend yield of 3.6% is ahead of the industry yield of 2.5%

The Zacks Consensus Estimate for 2013 increased 15.3% to $2.56 per share. All the estimates were revised higher over the last 60 days. For fiscal 2014 as well, the Zacks Consensus Estimate moved to $2.43 by 4.3%, owing to the upward revision of all the estimates.
Will NSN Merge with Alcatel-Lucent?

A recent report stated that a potential consolidation is waiting in the telecom network infrastructure manufacturers industry. The report hinted at the prospect of a merger between two network gear makers -- Nokia Solutions and Networks (:NSN), a division of Nokia Corp. ( NOK- Free Report) and Alcatel-Lucent S.A. ( ALU- Free Report).

The telecom service provider industry, particularly in the North American region is going through a wave of consolidation. Therefore, it may be a logical conclusion for the telecom network gear markers to begin consolidation to attain adequate economies of scale, cost synergies and geographical expansion. Currently both Nokia and Alcatel-Lucent have a Zacks Rank #3 (Hold). 

The combination of Nokia Solutions and Networks and Alcatel-Lucent may create a formidable player in the industry with a significant customer base on a global basis and huge operational efficiencies. The merged entity may pose severe competitive threat to the large telecom network infrastructure gear makers, such as LM Ericsson AB ( ERIC- Free Report), Cisco Systems Inc. ( CSCO- Free Report) and Huawei Technologies Co. Ltd.

Nokia Solutions and Networks has a strong technical efficiency in professional managed services, customer experience management together with a rich portfolio of mobile broadband infrastructure and 4G LTE networks. On the other hand, Alcatel-Lucent has a relative advantage in IP-based products, optical networking, cloud computing/software-defined networking, fixed broadband network and professional services.

Recently, Nokia Solutions and Networks entered into a deal with content delivery network operator CDNetworks to accelerate the delivery of mobile content. Liquid technology is a software solution for network infrastructure that drastically reduces the need for dedicated hardware. The company stated that its new Liquid Applications will change the competitive landscape of the telecom infrastructure gear market by revolutionizing base stations.

Similarly, Alcatel-Lucent recently collaborated with Qualcomm to develop small cell base stations that enhance 3G, 4G and WiFi networks to improve wireless connectivity in both residential and business enterprise segments.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
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