Zacks Bull and Bear of the Day Highlights: CF Industries, Merge Healthcare, Gap, American Eagle Outfitters and The TJX Companies
CHICAGO, Sept. 6, 2011 /PRNewswire/ -- Zacks Equity Research highlights CF Industries (NYSE: CF) as the Bull of the Day and Merge Healthcare's (Nasdaq: MRGE) as the Bear of the Day. In addition, Zacks Equity Research provides analysis Gap Inc. (NYSE: GPS), American Eagle Outfitters Inc. (NYSE: AEO) and The TJX Companies Inc. (NYSE: TJX).
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Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
CF Industries (NYSE: CF) delivered $6.87 per share in the second quarter, striding ahead of the Zacks Consensus Estimate of $5.94. Management is expecting farm income to set a new record this year, and believes that farmers are going to plan a very large corn planting next year.
The company expects the corn stocks-to-use ratio to remain in the mid-single-digits for the 2011 marketing year, supporting elevated corn prices. This should provide growers with a compelling incentive to reinvest some of their harvest income in crop inputs.
CF Industries has a good forward order book with attractive margins. We therefore upgrade our recommendation to Outperform from Neutral and have increased the target price to $210.00 from $154.00.
Merge Healthcare's (Nasdaq: MRGE) growth prospects are highly dependent on capital investments by hospitals for advanced imaging solutions, which are in turn tied to general economic conditions. Moreover, declining Medicare reimbursements could negatively affect hospital and imaging clinic revenue, which could reduce demand for software and services offered by Merge.
Although there is immense potential in the diagnostic imaging market, we remain concerned about the competitive scenario and macroeconomic headwinds. The presence of many big players like GE and McKesson has made the diagnostic imaging market highly competitive.
These headwinds compelled us to maintain the stock at Underperform with a target price of $5.25. Our target price corresponds to a price-to-book multiple of 8.1.
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Gap's Revenues Fall Again
Gap Inc. (NYSE: GPS), one of the leading global specialty retailers, reported a decline of 6.0% in same store sales for the four-week period ended August 27, 2011. Results for the month compared unfavorably with same store sales, which remained flat as of August 28, 2010.
Gap has reported a contraction in same store sales in every segment. The company reported a decline of 4.0% each in Old Navy North America and Banana Republic North America segments compared with negative 1.0% and positive 6.0% growth, respectively, experienced in the prior-year period.
Gap's North America's same-store sales inched down 8.0% versus a slight decline of 1.0% in the prior-year period. The company's same-store sales from the international region witnessed a contraction of 9.0% compared with a growth of 5.0% last year.
Net sales for the four-week period ended August 27, 2011 inched down 2.7% to $1.10 billion compared with net sales of $1.13 billion as of August 28, 2010, primarily due to sluggish performance across all of the company's businesses in North America.
Year-to-Date Sales
On August 27, 2011, Gap completed 30 weeks of fiscal 2011 and reported a decline of 3.0% in same store sales compared with an increase of 3.0% in the prior-year quarter. Net sales for the period remained almost flat at $7.78 billion compared with net sales of $7.77 billion in the prior-year period.
Gap operates in a highly fragmented market and competes with well-established rivals, such as American Eagle Outfitters Inc. (NYSE: AEO) and The TJX Companies Inc. (NYSE: TJX). With a reduction in disposable income and a cut in consumer discretionary spending resulting from the recent economic downturn, the company like all other retailers is under severe stress in order to maintain its performance.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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