CHICAGO, July 26, 2011 /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 Baker Hughes Inc. (NYSE: BHI), eBay Inc. (Nasdaq: EBAY), Amazon.com (Nasdaq: AMZN), Google Inc (Nasdaq: GOOG) and Mastercard Inc. (NYSE: MA).
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Here are highlights from Monday's Analyst Blog:
Baker Hughes Beats on Overseas Ops
Baker Hughes Inc. (NYSE: BHI) has posted an impressive second quarter of 2011, recording a year-over-year jump in per share profit on strong international operations. The company's earnings of 93 cents a share inched pasted the Zacks Consensus Estimates by 2 cents, but showed a dramatic improvement from 23 cents earning a year ago.
Revenue shot up 41% to $4,741 million in the quarter from the year-earlier level of $3,374 million. The top line also exceeded the Zacks Consensus Estimate of $4,553 million.
Outlook
We believe that Houston, Texas-based Baker Hughes, the world's third-largest oilfield services provider, is favorably positioned with a significant improvement in activity levels in both North America and the international regions. The company's strong portfolio of products and services will help it generate better-than-average results in the domestic market and enable it to further penetrate international markets. The company also has a competitive set of technologies, which allows it to continue deepwater activity in the Gulf of Mexico (GoM).
The company expects its worldwide demand to show an improvement, particularly in China, India, developing Asia and the Middle East, which will in turn boost its international spending. Activity is also expected to climb in the second half of 2011 and into 2012 led by the steady improvement in Brazil and the Middle East and will consequently support pricing improvements.
However, we remain cautious about the tardy deepwater drilling in the U.S. Gulf region. While deepwater activities have increased, the pace of permits being issued has slowed significantly. Moreover, the company expects to incur incremental expenses associated with the increase in deepwater GoM regulation in the second half of 2011.
eBay Business Looking Up
eBay Inc. (Nasdaq: EBAY) reported second quarter earnings of 46 cents, which was in line with the Zacks Consensus Estimate. Solid revenue growth, the impact of acquisitions, a stronger gross margin and a much lower tax rate helped drive results.
The company also provided an encouraging outlook for the third quarter and raised expectations for the year, which has resulted in buoyant share prices.
Revenue
Gross revenue of $2.76 billion was up 8.4% sequentially and 24.6% year over year, exceeding consensus expectations of $2.61 billion and the high end of eBay's guidance range of $2.55-2.65 billion. eBay's strategy of moving traffic to bigger sellers appears to be paying off, as the improved customer experience seems to be having a positive impact on demand.
Over 85% of total revenue was transactions-based, while the remaining 15% came from marketing services. Both transactions-based revenue (up 5.8% sequentially) and marketing services revenue (up 26.8% sequentially) contributed to the revenue upside versus guidance. They were also up 20.7% and 53.9%, respectively from a year ago.
Outlook
Management expects second quarter 2011 revenue of $2.85-2.95 billion (up 3-7% sequentially, up 27-31% year over year), GAAP EPS of 37 to 38 cents and non GAAP EPS of 46 to 47 cents.
For 2011, management expects revenue of $11.3-$11.6 billion (previous $10.6-$10.9 billion), GAAP EPS of $2.41 to $2.44 (previous $1.53 to $1.58) and non GAAP EPS of $1.97 to $2.00 (previous $1.93 to $1.97).
Conclusion
eBay reported another good quarter and provided encouraging guidance. The fixed price format, while impacting margins negatively, is making the company more competitive and management's focus on technological improvements, increased selection and improved buyer experience will further improve customer satisfaction.
Additionally, we consider GSI a big positive, since it brings on board fulfillment services something that eBay had been lacking.
Shares have responded positively to the news, but we are concerned about increasing competition from major online retailers, such as Amazon.com (Nasdaq: AMZN), as well as many other smaller players. Additionally, Google Inc (Nasdaq: GOOG) has been making some plays in the online retail space that potentially increase competition for the company.
We also think that eBay's payments business will sooner or later be impacted by online payment platforms from Mastercard Inc. (NYSE: MA) and other banks.
We are, however, encouraged by eBay's turnaround story and the fact that it is now growing with the market instead of losing market share. We therefore have a short term rating of Strong Buy (Zacks #1 Rank) on the shares.
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