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The Zacks Analyst Blog Highlights: Google, Qualcomm, Nvidia, Apple and Campbell Soup

Zacks Equity Research

For Immediate Release

Chicago, IL – April 4, 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 Google Inc. (GOOG), Qualcomm Inc. (QCOM), Nvidia (NVDA), Apple Inc. (AAPL) and Campbell Soup Company (CPB).

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Here are highlights from Wednesday’s Analyst Blog:

Google to Launch Second-Gen Tablet

According to Reuters, Internet search giant Google Inc. (GOOG) announced the launch of its second-generation Nexus 7 tablet, which will be powered by Qualcomm Inc.'s (QCOM) Snapdragon processor. Google will start selling its flagship tablet from Jul 2013.

Google, in collaboration with Asustek launched its first tablet Nexus 7 last year. Powered by Android OS, Nexus 7 comes with a 7-inch display and an Nvidia (NVDA) Tegra 3 quad-core chip. Google sold 4.5–4.6 million units of the tablet in 2012.

The second-generation tablet will come with a better screen resolution and have a thinner design. Google decided to install Qualcomm's chip, replacing Nvidia Corp's Tegra 3. Tablets with fast processors offer improved performance and therefore enjoy steady demand. With a new processor for its second generation Nexus tablets, Google hopes to make inroads into the overcrowded tablet market.

Google is yet to disclose the price of its latest tablet but we are expecting it to be affordable. Google, like Amazon is not dependent on hardware sales. Both have a thriving Internet business that could be well supported by proprietary hardware. Recently, Google also launched a same-day delivery service that indicates increased interest in the fast-growing ecommerce market. Therefore, both these companies gain from very low-priced tablets that could create a large installed base for selling other services.

Apple Inc. (AAPL) on the other hand, is primarily a hardware vendor and therefore greatly dependent on device sales. The company is likely to maintain its leadership position with the soon-to-be-launched next-generation tablet, iPad 5. According to IDC, Apple’s shipped 22.9 million tablets in the fourth quarter of 2012. In the process, Apple captured 43.6% of market share, followed by Samsung’s Galaxy line of tablets with 15.1% share, Amazon’s Kindle Fire with 11.5% and others. Google is way behind its competitors, but its Android-based tablets are gaining on iOS-based tablets every day..

Further, IDC is predicting that tablet shipments may reach 350 million by the end of 2017. It is predicting that lower screen size i.e. 7 inch and below may become more popular as consumers prefer smaller devices for daily use.

In the fourth quarter of fiscal 2012, Google’s gross revenue (including TAC) touched a record $14.4 billion, representing sequential and year-over-year increases of 2.3% and 36.2%, respectively. Excluding the $1.5 billion contribution from Motorola, revenues were up 21.9% from the year-ago quarter.

New New High for Campbell Soup

Shares of Campbell Soup Company (CPB) soared to a new 52-week high of $46.45 on Tuesday, Apr 2, following its previous high of $42.23 reached on Mar 19. The company continues to gain from a consistent positive earnings surprise trend, strong revenue growth, impressive management guidance, encouraging cash position and reasonable valuation levels.

Average volume of shares traded over the last 3 months stands at approximately 1,976K. Moreover, the stock currently trades at a forward P/E of 18.0x, at an 8.4% premium from the peer group average of 16.6x.

This Zacks Rank #2 (Buy) foods and simple meals manufacturer closed trade at $46.00 on Apr 2, representing a solid year-to-date return of approximately 28.1%, while gaining about 35.4% over the past one year.

Looking at its earnings surprise history, Campbell has beaten the Zacks Consensus Estimates consecutively over the past 8 quarters. The average positive surprise in the trailing 8 quarters comes to 7.1%.

The recent second-quarter fiscal 2013 results have added to its streak of upbeat performances. Campbell Soup posted earnings of 70 cents per share for second-quarter fiscal 2013, handily surpassing the Zacks Consensus Estimate of 66 cents, which led to a surprise of 6.1%. Moreover, quarterly earnings surged 9% year over year, primarily driven by a 10.5% rise in the top line.

Looking ahead, the company continues to anticipate sales growth in the range of 10%–12% and earnings between $2.51 and $2.57 per share in fiscal 2013, reflecting an increase of 3%–5% from 2012 level. The current Zacks Consensus Estimate stands at $2.55 per share.

Apart from strong results, Campbell’s growth story looks compelling. We believe the company’s prudent investment and strategic initiatives toward product innovation and brand building will boost its customer base and profitability.


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