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Zacks Bull and Bear of the Day Highlights: Hertz Global Holdings, Logitech, Walgreens, Express Scripts and CVS Caremark

Zacks Equity Research

For Immediate Release

Chicago, IL – March 7, 2013 – Zacks Equity Research highlights Hertz Global Holdings, Inc. (HTZ) as the Bull of the Day and Logitech (LOGI) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Walgreens (WAG), Express Scripts (ESRX) and CVS Caremark (CVS).

Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.

Here is a synopsis of all five stocks:

Bull of the Day:

Autos have been a bright light in this otherwise dim economic recovery. With leisure and corporate travel on the rise, the car rental business has performing as well. Today’s bull is the world’s largest auto renter and a Zacks Rank #1 with some impressive financial statistics.

The Hertz Corporation, which is a subsidiary of Hertz Global Holdings, Inc. (HTZ), is the world's largest airport / general use car rental company.

After their merger with the Dollar-Thrifty brands, the company now operates approximately 10,400 locations in over 150 countries worldwide.

What many don’t know is that Hertz also runs one of the world's largest equipment rental businesses, Hertz Equipment Rental Corporation. Hertz rental has 340 branches in the United States, Canada, China, France, Spain and Saudi Arabia.

Hertz also owns Donlen Corporation, a leader in providing fleet leasing and management services.

Bear of the Day:

There were over 155 million smartphones sold worldwide each quarter in 2012. Total 2011 sales were a staggering 491.4 million units. About 40-50% of all phones being sold today are smartphones with touch screens and the trend is growing.

Tablets are also booming and changing the computer landscape. Apple Inc. alone is expected to sell 55 million iPad minis, 33 million iPads and over 190 million iPhones in 2013. Samsung, Google and others will more than double those sales figures.

No matter what product you favor, they all have one thing in common: touch screens.

For companies like Logitech (LOGI) that sell mice, keyboards and other peripherals, the changing landscape, form factors and capabilities of the devices today are making business extremely tough.

Logitech designs, manufactures and markets innovative peripherals that provide people with easy access to the digital world. The Company's product family includes Internet video cameras, mice and trackballs, keyboards, audio and telephony products, interactive gaming devices and 3D controllers.

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Dismal February Results for Walgreens

Drug retailer Walgreens (WAG) recently disclosed its sales data for the month of Feb.

Walgreens also reported sales for the second quarter of fiscal 2013, ending Feb 28. Total sales came in at $18.63 billion, down 0.1% year over year and trailing the current Zacks Consensus Estimate of $18.91 billion, missing top-line Zacks Consensus Estimate for the fourth time in a row.

Walgreens is slated to release second quarter fiscal 2013 earnings later this month.

Monthly Numbers

Walgreens suffered a setback after improving monthly results in Jan as Feb sales declined 2.2% on a year-over-year basis to $5.75 billion. However, the dull results can be attributed to one extra day of the leap year in Feb 2012. Excluding this impact, sales in Feb 2013 inched up 1.5%.

Total front-end sales edged down 3.1% (flat excluding the leap-year impact) compared with the year-ago period, while comparable store front-end sales declined 1.4%. Customer traffic in comparable stores was down 4.9% although basket size increased 3.5% year over year.

Prescriptions filled at comparable stores at Walgreens improved 6.5% in the reported month on the heels of a 0.1 percentage point positive impact from the higher incidence of flu. According to the company, flu shot administration did not affect the comparable store sales in Feb 2013.

Total sales in comparable stores dipped 0.6% on a year-over-year basis. A decline of 3.7 percentage points was attributable to generic wave in the pharmaceutical industry during the last 12 months.

The introduction of generic drugs also led to a 2.1% decline in Walgreens’ total pharmacy sales which accounted for the lion’s share (61.9%) of total sales in Feb. Comparable store pharmacy sales remained flat despite the adverse impact of 2.3 percentage points due to the generic wave. Flu shots administered at pharmacies and clinics season-to-date were about 7.0 million, up approximately 27% year over year.

To date, Walgreens’ Balance Rewards loyalty program (launched on Sep 2012) has recorded roughly 60 million registrations. The company opened 11 stores and closed one during the month.

As of Feb 28, 2013, the company operated 8,539 locations in 50 states, the District of Columbia, Puerto Rico and Guam, including 8,071 drugstores (231 more compared with the year-ago period). The company also operates infusion and respiratory service facilities, specialty pharmacies and mail service facilities.

Our View

Walgreens’ second quarter was the first full quarter to include the benefit from the return of Express Scripts (ESRX) customers following the resolution of the earlier impasse between the two companies. Despite the upside, Walgreens reported another quarter of lean sales.

Not only did the top-line result lag the year-ago mark, it failed to meet our expectations. Market sentiments also slipped due to the disappointing results as stock price declined 2.51% (or $1.05) to close at $40.72 on Mar 5, 2013.

As expected by Walgreens, the pharmacy business continues to slow down as the generic wave continues to hurt franchise revenues. In the interim, the company’s strategy of reviving growth of its front-end stores is paying off. However, we believe that competitive industry conditions and tough current business environment prevail for Walgreens.

The stock carries a Zacks Rank #3 (Hold). While we remain on the sidelines for Walgreens, we are bullish on CVS Caremark (CVS), which carries a Zacks Rank #2 (Buy).

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.

About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

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Read the analyst report on HTZ

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