Zacks Equity Research highlights
Sierra Wireless (Nasdaq: SWIR) as the Bull of the Day and
Tollgrade Communications (Nasdaq: TLGD) as the Bear of the Day. In
addition, Zacks Equity Research provides analysis on BorgWarner
(NYSE: BWA),
deCODE genetics, Inc. (Nasdaq: DCGN) and Sohu.com (Nasdaq:
SOHU). Full analysis of all these stocks is available at http://at.zacks.com/?id=2676.
Here is a synopsis of all five stocks:
Bull
of the Day: Sierra Wireless (Nasdaq: SWIR)
Sierra Wireless, a leading provider of OEM wireless modem cards and
access solutions, announced impressive first quarter of fiscal 2008
financial results that exceeded the company’s
own guidance. Precipitous demand and requirements for next-generation
wireless data cards, USB modems, and PC embedded modules that connect to
the rapidly implemented 3G wireless networks were enabling factors for
encouraging growth. This is supported by newly launched HSUPA AirCards
which achieved prodigious market acceptance in different geographies.
Also, the proposed acquisition of Cradlepoint, Inc. is expected to
further solidify the company’s position in the
mobile broadband networking market. We maintain our Buy recommendation
with a higher valuation target as we assess Sierra Wireless’
ability to maintain a strong market position with long-established
business channels as the company provides multiple products to a large
number of major wireless carriers.
Bear
of the Day: Tollgrade Communications (Nasdaq: TLGD)
We downgrade our recommendation to a Sell for Tollgrade, a provider of
telecom testing and software solutions to carriers, as a result of
expected demand weakness for the company’s
core products. First quarter 2008 financial results of Tollgrade were
disappointing, well below our estimates. We believe market demand for
the company’s cable hardware & software
products, along with Metallic Channel Unit (MCU) products, will remain
tepid for the remainder of the fiscal year.
Several business opportunities have been deferred indefinitely as a
result of restrictive capital spending on the part of the telecom
service providers. Furthermore, it is our opinion that the company is
challenged with developing new products that may generate a potential
turnaround over the next six to twelve months.
Latest Posts on the Zacks Analyst
Blog:
BorgWarner (NYSE: BWA)
BorgWarner is expected to benefit from the growing demand for its strong
technology-based product portfolio. About $1.95 billion of new
powertrain business is expected between 2008 and 2010. Also, BWA has
healthy financials with low debt and has further taken initiatives to
maintain margins in the challenging North American industry environment.
However, due to high raw material costs and price concessions to
automotive makers, we rate the shares a Hold.
On May 1, 2008, BorgWarner reported first quarter 2008 results. For the
quarter, sales were up 17% to $1,498.9 million, compared with $1,277.8
million in first quarter 2007. Net income in the quarter was $88.7
million, or $0.75 per diluted share, compared with $58.4 million, or
$0.50 per diluted share in first quarter 2007 adjusted for the
two-for-one stock split on December 17, 2007.
deCODE genetics, Inc. (Nasdaq: DCGN)
deCODE genetics is a biopharmaceutical company that uses genetics
to develop drugs, diagnostics, and pharmacogenetics for the healthcare
industry. We were pleased to see the positive phase II data on candidate
DG-031 and the phase IIa data on DG-051.
However, the company announced the voluntary suspension of the phase III
trial for DG-031 due to manufacturing problems in early October 2006. We
believe DCGN will trend sideways over the next few months as investors
await a partnership announcement for DG-031, DG-041 and DG-051. We would
also like to see the financial performance of the diagnostics tests
launched recently.
Sohu.com (Nasdaq: SOHU)
Sohu.com, Inc. reported blockbuster financial results for the first
quarter of 2008. The company’s revenue and
earnings greatly exceeded market expectations and company guidance
because of strong growth in its online game business.
Although SOHU faces fierce competition from different fields, the
company manages to be a main player in almost each field. With the
Beijing 2008 Olympics sponsorship, SOHU has a well-known brand and rich
website resources to leverage the great opportunities for online
business in China.
On April 28, Sohu reported unaudited financial results for the first
quarter ended March 31, 2008. For the first quarter, its total revenues
were US$84.8 million, up 156% year-over-year and 30%
quarter-over-quarter. Its brand advertising revenues were US$33.2
million, up 41% year-over-year and 3% quarter-over-quarter. Its online
game revenues were US$41 million, up 24 times year-over-year and 71%
quarter-over-quarter. Its net income was US$21.6 million or US$0.55 per
fully diluted share. Its net income increased by 383% year-over-year and
43% quarter-over-quarter.
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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