The Zacks Analyst Blog Highlights: Garmin, Apple, Google, Harman International
Industries and Johnson & Johnson
CHICAGO, June 14, 2012
CHICAGO, June 14, 2012 /PRNewswire/ --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 Garmin Ltd (Nasdaq:GRMN), Apple
Inc. (Nasdaq:AAPL), Google Inc. (Nasdaq:GOOG), Harman International Industries
Inc. (NYSE:HAR) and Johnson & Johnson (NYSE:JNJ).
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Here are highlights from Wednesday's Analyst Blog:
Garmin Faces Heat from Apple Maps
Garmin Ltd (Nasdaq:GRMN), a leading developer of personal navigational devices
(PND) is expected to face heightened competition from consumer electronics
giant Apple Inc. (Nasdaq:AAPL) following the recent launch of its new mapping
software for iOS based devices.
The new mapping software is based on 3D technology. The application features
turn-by-turn navigation system, real-time traffic data and is capable of
offering alternative routes depending on traffic conditions. The software is
also supported by Apple's voice application Siri, which was launched with
iPhone 4S (on October 14, 2011).
Garmin enjoys a dominant position in the PND market space based on its popular
products such as nuvi, zumo and street pilot application, all of which have
been more or less represented in the new iOS software.
Garmin has been seeing tough competition from mapping and personal navigation
software provided by Google Inc. (Nasdaq:GOOG) for quite some time. This was
primarily due to the strong adoption of Google's Android-based smartphones.
However, the competition is expected to get more intense once Apple enters the
market with its new application.
We believe that the entrance of Apple poses a significant threat for Garmin
going forward. This is particularly due to the massive popularity of Apple's
iPhone and iPad devices. With the upcoming release of its updated mobile
operating system iOS 6, Apple is completely removing the Google map service
from its devices.
Being the market leader, Garmin is likely to be the most negatively affected
by the growing number of players in the navigation segment. Of course, other
players, such as such as Harman International Industries Inc. (NYSE:HAR) will
also not go unscathed.
We think that Garmin is in danger of seeing a secular decline in demand for
its GPS technology, which is rapidly becoming an inbuilt portion of electronic
devices like smartphones and tablets.
Garmin has been diversifying its business over the past few years, although it
continues to generate a significant percentage of its revenue from personal
navigation devices sold through its auto/mobile segment.
Its efforts have resulted in greater stability and growth in the outdoor,
fitness and marine segments in particular. Garmin is also well positioned in
the aviation market, although recessionary pressures have impacted this
Currently, both Apple Inc. and Google Inc. have Zacks Rank of #2, implying a
short-term Buy recommendation. On the other hand, Garmin and Harman
International have a Zacks Rank of #3, implying a short-term Hold
Synthes Deal to Be Accretive for J&J
Johnson & Johnson (NYSE:JNJ) is all set to complete its acquisition of
Synthes, Inc. on June 14, 2012. The company, which received Federal Trade
Commission (FTC) approval recently, will be acquiring Synthes for a total
purchase price of approximately $19.7 billion in cash and stock.
For each share of Synthes, the shareholder will be entitled to receive CHF
55.65 in cash and 1.7170 shares of Johnson & Johnson common stock.
Antitrust approval from the European Commission was granted on April 19, 2012.
Meanwhile, the FTC asked Johnson & Johnson to sell its system for treating
distal radius wrist fractures. Johnson & Johnson said that it will be selling
its entire trauma portfolio, including DVR, to Biomet. The sale is scheduled
to go through later this month.
Johnson & Johnson announced that its wholly owned Irish subsidiary, Janssen
Pharmaceutical, has signed a $12.9 billion accelerated share repurchase (ASR)
programs with two investment bankers. The shares purchased under the ASR
agreements, along with cash on hand from Janssen Pharmaceutical, will be used
towards the purchase consideration for the Synthes deal.
With the company announcing the share buyback program and the financial
structure for the deal, Johnson & Johnson now expects the Synthes acquisition
to be accretive to earnings instead of dilutive as expected earlier. Earlier,
the company had said that it expects the deal to be dilutive by 22 cents per
share in 2012.
However, with the financial structure in place, the company now expects the
acquisition to boost 2012 adjusted earnings by 3-5 cents per share. Meanwhile,
2013 earnings are expected to be boosted by 10-15 cents per share due to the
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