Zacks Equity Research highlights DIRECTV (NYSE: DTV) as the Bull
of the Day and Ambac Financial Group (NYSE: ABK) as the Bear of
the Day. In addition, Zacks Equity Research provides analysis on
Standard Motor Products (NYSE: SMP), Concur Technologies
(Nasdaq: CNQR) and Interstate Hotels & Resorts (NYSE: IHR).
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: DIRECTV (NYSE: DTV)
DIRECTV has vigorously grown its free cash flow and earnings over the
last two years. It is now cutting churn-related costs, and raising the
quality of its subscriber base by tightening credit standards. We
believe the company is poised to sustain its strong revenue and earnings
growth.
Bear of the Day: Ambac Financial Group (NYSE: ABK)
1Q08 operating results were a negative $6.93 per share, due to non-cash,
mark-to-market losses on its credit derivative exposures of $1.7 billion
pretax. Given the rating agency’s negative
outlook (with further downgrades possible) and competitive challenges
from writing new business during the quarter, these have and should
continue to weigh on ABK’s ability to generate
revenue and EPS over the near term.
Latest Posts on the Zacks Analyst Blog:
Standard Motor Products (NYSE: SMP)
Standard Motor Products, Inc. has achieved significant cost savings due
to the successful integration of the Dana Engine Management business.
The company also has strong brand recognition and a less cyclical
end-market within the auto and auto parts industry. Moreover, SMP
expects to benefit from the shifting of its production facilities to
Mexico on account of low labor costs. Further, the company's temperature
control segment is facing strong competition with the Chinese imports.
Concur Technologies (Nasdaq: CNQR)
Concur Technologies reported results for its second quarter of 2008 that
exceeded our revenue and earnings estimates. There was very strong
growth in higher-margined subscription revenues in the quarter. We have
raised our 2008 revenue projection to reflect an anticipated 63.5%
year-over-year growth rate, and have also increased our earnings
estimate based on company guidance.
The stock trades at a significant P/E premium to the S&P 500, its
industry mean and median, and even its well-established peers. While
Concur has a slightly weaker balance sheet but strong near-term
fundamentals, we are concerned about the company’s
long-term prospects, as eventually it will begin to bump heads with the
major industry players as it continues to grow at a significant pace.
Interstate Hotels & Resorts (NYSE: IHR)
We maintain our Buy rating on shares of Interstate Hotels & Resorts
following the release of Q1 financial results. Given the company's
recent steps to expand its wholly-owned hotel portfolio, in addition to
its efforts to increase its joint-venture ownership positions, we
believe that the current share price represents an attractive entry
point.
The company's third-party management portfolio has stabilized and recent
steps to expand internationally have created significant growth
potential, in our opinion. Our target price of $6.00 per share reflects
a weighted average EBITDA multiple of approximately 9.5x our 2008
estimate.
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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.
About the Analyst Blog
Updated throughout every trading day, the Analyst Blog provides analysis
from Zacks Equity Research about the latest news and events impacting
stocks and the financial markets.
About Zacks Equity Research
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Continuous coverage is provided for a universe of 1,150 publicly traded
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