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The Zacks Analyst Blog Highlights: Tesla Motors, Cisco Systems, Facebook, Google and Starbucks

Zacks Equity Research

For Immediate Release
Chicago, IL – October 07, 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 Tesla Motors, Inc. ( TSLA- Free Report), Cisco Systems Inc ( CSCO- Free Report), Facebook ( FB- Free Report), Google Inc ( GOOG- Free Report) and Starbucks ( SBUX- 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:

Tesla Downgraded to Zacks Rank Buy

On Oct 3, Zacks Investment Research downgraded Tesla Motors, Inc. ( TSLA- Free Report) to a Zacks Rank #2 (Buy).

Why the Downgrade?

Tesla has witnessed sharp decline in share prices since a video showed its Model S catching fire near Seattle, WA on Oct 2.

Tesla’s shares dropped 4.2% to $173.31 yesterday and it declined 6.2% to $180.95 the day before, as the news sparked investors’ concern about the company’s sales getting a hit. Investors were worried that Model S sales may decline if the fire resulted from any defect in the company's battery packs. The company’s share price was also affected by a downgrade in Tesla’s recommendation to Neutral from Outperform by R.W. Baird.

However, we remain optimistic about Tesla based on its expansion in Europe and China together with better performance in the second quarter of 2013. The company started taking bookings of Model S recently. While Model S caters primarily to the affluent class in China, it is also expected to be popular among the environmentally conscious consumers.

Tesla is also expanding in Europe with a new assembly plant. The company inaugurated its 18,900-square meters Tilburg Assembly Plant in Netherlands for Model S. The plant will be the final assembly and distribution center for all Model S cars to be marketed in Europe.

The plant will also serve as the European service and parts headquarters of Tesla. The automaker selected this location because of its good connectivity with all important markets in Europe via rail and motorway network.

The Palo Alto, CA-based automaker logged a loss of $30.5 million or 26 cents per share in the second quarter of 2013 lower than a loss of $105.6 million or $1.00 per share recorded in the year-ago quarter.

Barring one-time items other than stock-based compensation expense, Tesla’s earnings were 5 cents per share in the quarter compared with the prior-year loss of $1.00 a share. That compares favorably with the Zacks Consensus Estimate of a loss of 36 cents a share.

Cisco, Facebook Team Up

Cisco Systems Inc ( CSCO- Free Report) recently entered into a partnership with Facebook ( FB- Free Report) to provide customers the opportunity to connect to wireless networks at different merchants by simply logging in to their respective Facebook accounts. This service is called Cisco Connected Mobile Experience (:CMX) with Facebook Wi-fi.

The partnership will help retailers to serve their customers better, enabling them to understand demographic details. It will also provide more opportunities to businesses to connect with their customers by providing more likes and check-ins to the businesses’ Facebook pages. Additionally, shoppers will get free access to Wi-fi alongwith other lucrative offers.

With the CMX for Facebook Wi-fi feature enabled on a phone, a customer joining a business’ Wi-fi network will be directed to a Facebook page to check in. From there, the customers will be redirected to the business’ Facebook page where the requisite information about the business is available.
This CMX feature is expected to provide personalized mobile services to consumers. This Wi-fi venture is not funded by Facebook and the cost of network equipment and broadband will have to be borne by the retailers.

This deal will not only prove beneficial for Cisco but will also enable Facebook to develop closer relationships with merchants by providing them essential demographic data to improve services. Better services, in turn, would ensure customer retention and also help in acquiring new customers, thereby enhancing profits.

With this effort, Facebook now joins its competitor Google Inc ( GOOG- Free Report) in helping users get direct access to the Internet. Recently, Google too had declared its intentions of bringing in free wireless Internet connectivity to approximately 7000 Starbucks ( SBUX- Free Report) cafes across the United States. Cisco, on the other hand, appears to be focusing on selling its network equipment.

Cisco Systems, Inc. is the worldwide leader in networking for the Internet. Cisco Systems reported fourth quarter 2013 earnings of 49 cents a share, beating the Zacks Consensus Estimate of 47 cents on higher revenues and lower-than-expected operating expenses. Revenues increased 6.0% year over year and 1.6% sequentially to $12.4 billion.

Cisco’s strategy of pursuing growth opportunities in international markets has helped in the delivery of positive results. Despite facing intense competition from various small players, it continues to remain strong in its domain.

Currently, Cisco has a Zacks Rank # 3 (Hold).

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

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