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The Zacks Analyst Blog Highlights: Qualcomm, Apple, Google, Microsoft and Elizabeth Arden

Zacks Equity Research

For Immediate Release

Chicago, IL – August 15, 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 Qualcomm Inc. (QCOM-Free Report), Apple Inc. (AAPL-Free Report), Google Inc. (GOOG-Free Report), Microsoft Corp. (MSFT-Free Report) and Elizabeth Arden, Inc. (RDEN-Free Report).

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

Here are highlights from Wednesday’s Analyst Blog:

Qualcomm Remains Neutral

We reiterate our long-term Neutral recommendation on Qualcomm Inc. (QCOM-Free Report). The company reported strong financial results for the third quarter of fiscal 2013, beating the Zacks Consensus Estimate. Qualcomm currently has a Zacks Rank #3 (Hold).

Why Kept at Neutral?

We believe that Qualcomm will continue to perform well due to a significant surge in the demand for smartphones and tablets. Management has raised its outlook for fiscal 2013 and is quite confident that it will be able to retain its current rate of revenue and earnings growth, going forward.

We believe that the long-term fundamentals of the company remain intriguing given the increasing demand for LTE-enabled mobile handsets in the developed countries, rapid transition from 2G to 3G and 4G in China and India and increasing licensing revenues. Qualcomm has a very healthy cash position, helping it to undertake several R&D activities for the next-generation products.

Qualcomm is a major chipset supplier to Samsung, which is currently the largest seller of smartphones globally and a major chipset supplier to Apple Inc. (AAPL-Free Report) for its popular iPhones. Google Inc. (GOOG-Free Report) has decided to use Snapdragon processor for its latest Nexus 7 tablets. Qualcomm has been favored by the Windows 8 operating system of Microsoft Corp. (MSFT-Free Report).

During the third quarter of fiscal 2013, Qualcomm shipped 172 million MSM chipsets, up 22% year over year. This figure was far better than the company’s guidance of a mid-point of 168 million. Average selling price of mobile handsets with an in-build Qualcomm chipset during this quarter was around $227-$233. This sequential increase registered a substantial hike of $13 from the last quarter’s mid-point.

Nevertheless, the ongoing global economic volatility may severely impact the telecommunications industry, which in turn may negatively affect the demand for Qualcomm developed chipsets. Qualcomm’s future growth depends on the continuous deployment of CDMA/OFDMA-based network technologies.

If the emerging markets fail to maintain the current rate of installing high-speed 3G, next-generation 4G or any hybrid 3G-4G wireless networks, the demand for smartphones will decline, which will affect Qualcomm’s financials.

Elizabeth Arden Downgraded to Strong Sell

Zacks Investment Research downgraded Elizabeth Arden, Inc. (RDEN-Free Report) to a Zacks Rank #5 (Strong Sell) on Aug 13, following dismal fourth-quarter and fiscal 2013 results announced last week.

Why the Downgrade?

Elizabeth Arden has witnessed sharp downward estimate revisions after reporting lower-than-expected fourth quarter and fiscal 2013 results. Shares of this makeup and skin care company crashed after the announcement and given its weak outlook for the upcoming fiscal year it has more downside left.

On Aug 8, Elizabeth Arden reported fiscal fourth-quarter earnings per share of 10 cents, missing the Zacks Consensus Estimate by 68.8% and the year-ago earnings by 64.3% due to lower revenues and poor margins. Revenues rose only 0.8% to $267.9 million and missed the Zacks Consensus Estimate of $289 million.

The fiscal 2013 earnings and revenues also missed the Zacks Consensus Estimates and fell short of the company’s expectations. The company’s growth expectations for the Elizabeth Arden brand – one of the most widely recognized beauty brands in the world – proved to be too optimistic leading the company to perform below expectations in the year. Additionally, lower-than-expected orders from one of the largest North American mass retail customers and a weak performance in Europe, especially in the U.K., pulled down revenues in both fourth quarter and fiscal 2013.

In addition, Elizabeth Arden issued a relatively weak outlook for fiscal 2014. For full year 2014, sales are expected to grow between 3.0% and 5.0% year over year, much lower than the growth seen in fiscal 2013. Earnings are expected in the range of $2.15 to $2.30, representing approximately 4% growth at the mid-point.

The Zacks Consensus Estimate for 2014 decreased a sharp 22.1% to $2.19 per share over the last 7 days as all the estimates were revised downwards. Estimates for fiscal 2015 went down 23.6% over the same timeframe.

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

About Zacks Equity Research

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