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The Zacks Analyst Blog Highlights: MasterCard, Visa, American Express, Trimble Navigation and Google



The Zacks Analyst Blog Highlights: MasterCard, Visa, American Express, Trimble
                            Navigation and Google

PR Newswire

CHICAGO, Sept. 24, 2012

CHICAGO, Sept. 24, 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 MasterCard Inc. (NYSE:MA), Visa
Inc. (NYSE:V), American Express Co. (NYSE:AXP), Trimble Navigation
(Nasdaq:TRMB) and Google (Nasdaq:GOOG).

(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)

Get the most recent insight from Zacks Equity Research with the free Profit
from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Friday's Analyst Blog:

MasterCard Expects Tepid 2H Growth

At a recent investor meeting, MasterCard Inc. (NYSE:MA) laid down its growth
projections for the upcoming quarters. The guidance reflected a lukewarm
top-line escalation in the second half of 2012.

Difficult comps, timing of the deal renewals and economic volatility has led
management to peg top-line growth below 13% for the second half of 2012. The
sluggish and volatile credit quality of the market, amid the recent global
crisis, has adversely affected MasterCard's credit and charge card growth.

Furthermore, MasterCard continues to face headwinds in maintaining the cost of
operations of its vastly expanded business. While operating costs continues to
showcase an increasing trend, higher expenses on litigation settlements and
other regulatory challenges not only weigh on the financials but also impose
restrictions on the scope of business growth.

In addition, strong competition and stringent regulatory reforms have
disturbed the pricing, credit allocation and business model of the company.
Subsequently, currency and interest rate fluctuations, along with higher
rebates and incentives passed on to the customers and intermediaries, have
been consistently weighing on the margins of the company.

Going ahead, intense competitive pressure, from arch rivals such as Visa Inc.
(NYSE:V) and American Express Co. (NYSE:AXP), amid ongoing weak global cues is
likely to add to the woes.

As a result, management disclosed its tapered long-term anticipation of
achieving compounded annual growth of 11–14% for the period 2013–2015, while
operating margin could be sustained at least at 50%. As well, earnings per
share are expected to grow at a compounded annual rate of minimum 20%.

Moreover, card giants such as MasterCard and Visa are expected to witness
bottom-line growth of about 20% over the next 3–5 years, which is quite lower
than the historic average 30% growth achieved in the past 5 years. Even
Thomson Reuters assimilated the street expectations that MasterCard would
generate $1.94 billion in revenues in the third quarter of 2012, which would
climb 7% from the year-ago quarter.

Nevertheless, we believe that a stable economy and a proactive expense
management could help the card giants, particularly MasterCard to rebound to
its historical highs. Despite the economic turmoil that eroded the reserves of
most of the organizations, MasterCard enjoys strong cash and
available-for-sale investment position along with strong operating cash flow,
retained earnings and no long-term debt for over a couple of years now. As a
result of this strong balance sheet position, the company aims to continue
executing its share repurchase program even in the current bumpy patch.

Hence, based on the pros and cons, the Zacks Consensus Estimate pegs earnings
for the third quarter of 2012 at $5.92 per share, which is about 5% higher
than that of the year-ago quarter. For 2012 and 2013, earnings per share are
expected to climb about 17%, over prior year, to $21.84 and $25.61,
respectively.

MasterCard currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating and indicates no clear directional pressure on the
stock in the near term.

Trimble Acquires Logicway

Trimble Navigation (Nasdaq:TRMB) recently announced that it has acquired
privately-held Logicway based in Oldenzaal, The Netherlands. The financial
terms of the deal were not disclosed.

Logicway is a specialized software developer for the transportation and
logistics (T&L) industry. Its software not only helps in synchronizing
end-to-end business processes but also automates the steps involved in the
wages and expenses calculation for businesses, helping to improve productivity
and operational efficiency.

Logicway software is already integrated within Trimble's T&L solutions. Upon
the completion of the deal, the Logicway business will be reported within
Trimble's Mobile Solutions (TMS) segment. The acquisition will enable Trimble
to provide improved product offerings and better deal with the increasing
complexity of the T&L industry.

Trimble is quite active on the mergers and acquisitions (M&A) front. The
company's acquisitions have helped it to build its portfolio and increase
top-line growth. Acquisitions have also been positive for gross margins, while
adding operating leverage. Last month, Trimble acquired privately-held TMW
Systems, another specialized software developer for the transportation and
logistics industry for $355 million. Earlier this year, Trimble acquired a 3-D
modeling software platform from Internet search giant Google (Nasdaq:GOOG).
The purchase price for the software was not revealed.

Trimble Navigation, Ltd. is an original equipment manufacturer (OEM) of
positioning, surveying and machine control products. In the last-reported
second quarter of 2012, TMS segment revenue of $81.4 million was up 3.9%
sequentially and 102.4% from the comparable quarter of 2011. Trimble has been
putting in a lot of effort here, discontinuing and disposing of non-focus
product lines and building a desired portfolio through successive
acquisitions. The latest acquisition is expected to further enhance the
performance of commercial vehicles and fleets, thus driving segment revenue.

Trimble's solid portfolio (enhanced by acquisitions), strong market position
and strategic partnerships are expected to drive both revenue and earnings
over the next few quarters.

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