Zacks Bull and Bear of the Day Highlights: Pool, Avnet, Activision Blizzard,
Electronic Arts and Take-Two Interactive Software
CHICAGO, Nov. 6, 2012
CHICAGO, Nov. 6, 2012 /PRNewswire/ --Zacks Equity Research highlights Pool
Corporation (Nasdaq:POOL) as the Bull of the Day and Avnet, Inc. (NYSE:AVT) as
the Bear of the Day. In addition, Zacks Equity Research provides analysis on
Activision Blizzard Inc. (Nasdaq:ATVI), Electronic Arts Inc. (Nasdaq:EA) and
Take-Two Interactive Software Inc. (Nasdaq:TTWO).
Full analysis of all these stocks is available at
Here is a synopsis of all five stocks:
Bull of the Day:
Pool Corporation (Nasdaq:POOL) is a recognized leader in the swimming pools
industry. The potential for market share gain is significant, and
cost-containment initiatives augur well for the business. Pool's results
reflect continued growth in its once struggling Green business.
Amid a tough business environment in terms of weak growth in new pool
constructions and faltering consumer confidence, Pool's revenue has been
growing in addition to the strength in earnings. The company expects the
market condition to improve beyond 2012 as well. The company also raised its
full-year guidance due to the return of activity to normal levels despite some
pull-forward demand in the firsthalf of 2012, and bears an optimistic view for
the near future.
Pool hopes to grow earnings per share over 20% this year which, if achieved,
will be for the third year in a row. Hence, we upgrade the recommendation from
Neutral to Outperform.
Bear of the Day:
We are downgrading our recommendation on Avnet, Inc. (NYSE:AVT) from Neutral
to Underperform. Earnings estimates for the company have declined
significantly, as the weakened economy and currency fluctuation continues to
hurt its businesses.
Moreover, the competitive strides in the industry may have a detrimental
impact on the company. However, Avnet's diversified product ranges and notable
acquisition strategy should have a positive impact on its businesses.
Mounting competition in the industry and negative foreign currency are also
likely to be causes of concern moving forward. We have set a target price of
$25.00 based on a P/E multiple of 8.9x to our 2013 EPS estimate.
Latest Posts on the Zacks Analyst Blog:
Earnings Preview: Activision
Activision Blizzard Inc. (Nasdaq:ATVI) is scheduled to release its fiscal
third quarter 2012 results after the closing bell on November 7, 2012.
Prior Quarter Highlights
Activision reported robust second quarter 2012 results. Revenues on non-GAAP
basis surged 50.8% year over year to $1.05 billion in the quarter and
comfortably exceeded the company's guidance of $805.0 million. The quarterly
revenues also surpassed the Zacks Consensus Estimate of $893.0 million. The
significant year-over-year growth was driven by strong performances from
Diablo III, Skylanders, World of Warcraft and Call of Duty franchises.
Activision's bottom line also doubled to 20 cents in the reported quarter
boosted by higher revenue and solid margin expansions. Including stock based
compensation, earnings came at 18 cents.
For the third quarter, Activision expects non-GAAP earnings of 7 cents per
share on revenues of $690 million. The Zacks Consensus Estimate for revenue
was $707 million.
For further details please read: Activision's 2Q Profits Double Y/Y
Estimate Revision Trend
In the last 30 days, none out of the 5 analysts covering the stock revised
their estimates for the third quarter. The Zacks Consensus Estimate for the
quarter remained at 7 cents per share for the same period of time.
Analysts expect Activision's top line to exceed estimates banking on higher
sales of World of Warcraft: Mists of Pandaria. Moreover, the bottom line is
expected to get a boost from higher digital sales and share repurchase
activity. However, analysts remain concerned regarding the uncertain
macroeconomic conditions coupled with subscription losses in the World of
Warcraft game and weaker-than-expected sales from Call of Duty: Black Ops II.
We note that Activision has a staggering average earnings surprise of 217.7%
over the past four quarters. We don't expect a major change in the earnings
trend pattern for the current quarter. We believe that Activision is focusing
on expanding its product portfolio that will boost top-line growth over the
Meanwhile, Activision continues to strengthen its World of Warcraft, Call of
Duty and Skylanders franchises through the launch of new versions and content
packs, which are expected to boost top-line growth in the near term. Moreover,
with video game sales slowing down in the major western markets, Activision
has been focusing on boosting its presence in the emerging markets of China
and South East Asia.
However, softness in the video game industry and significant competition from
Electronic Arts Inc. (Nasdaq:EA) and Take-Two Interactive Software Inc.
(Nasdaq:TTWO) are the major headwinds going forward. Moreover, increasing
investment related to new product developments may hurt profitability in the
We prefer to remain on the sidelines due to these concerns and maintain our
Neutral recommendation over the long term (6-12 months). Currently, Activision
Blizzard has a Zacks #3 Rank, which implies a 'Hold' rating in the short term.
Get the full analysis of all these stocks by going to
About the Bull and Bear of the Day
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