CHICAGO, May 31, 2011 /PRNewswire/ -- Zacks Equity Research highlights: Oracle Corporation (NYSE: TM) as the Bull of the Day and Universal Forest Products Inc. (Nasdaq: UFPI), as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Computer Sciences Corp. (CSC), Accenture (NYSE: ACN) and Hewlett-Packard Company (NYSE: HPQ).
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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:
Oracle Corporation (NYSE: TM) reported strong third quarter results, which beat the Zacks Consensus Estimate by $0.04. Robust results were primarily driven by strong revenue growth and new software sales were encouraging. The company also provided a robust fourth quarter 2011 outlook.
Given the improving prospects, we have raised our estimates for the fourth quarter, fiscal 2011 and fiscal 2012 by 6.2%, 4.0% and 3.6%, respectively. We believe Oracle will continue to benefit from its dominant position in the database management and software market.
We are positive on Oracle's longer-term growth prospects, given its growing market share, cost-saving initiatives, focus on improving profitability, new product pipeline and solid free cash flow. We maintain our Outperform rating and raise our target price from $37.00 to $41.00.
Universal Forest Products Inc. (Nasdaq: UFPI) reported quite disappointing results in the first quarter of 2011 with EPS falling 20 cents below the Zacks Consensus Estimate. The company's top line also plummeted, largely owing to lost production days and lower sales in its three major business segments.
Moreover, higher costs of sales due to volatile lumber prices added to the downfall. In addition, Universal's precarious dependence on general market conditions and growth in end-markets heighten top-line risks in the event of any adverse conditions. The company also faces significant volatility in the cost of commodity lumber products from primary producers, which worsens the situation further.
The company derives a large portion of its sales from one single customer, which exposes it to customer concentration risks. In anticipation of a lack of positive catalysts, we maintain an Underperform recommendation on the stock.
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CSC Flat, Revenues Decline
Computer Sciences Corporation (NYSE: CSC) reported fourth quarter 2011 EPS of $1.01, exceeding the Zacks Consensus Estimate of 96 cents.
Revenue
The company's fourth quarter 2011 revenue of $4.20 billion was flat with the year-ago quarter. Fiscal 2011 was a tough year as the NHS contract was pushed out further. Additionally, CSC has had a difficult time with its Nordics business and delays in federal budgets. Irrespective of this, CSC recorded positive revenue growth in the Commercial business both sequentially and year-over-year.
North American Public Sector (NPS) revenue was $1.50 billion, down 4.7% compared to the year-ago quarter. Managed Services Sector (MSS) revenue was $1.75 billion, up 3.6% from the year-ago quarter. Business Solutions and Services (BSS) revenue was $981.0 million, down 1.0% compared to the year-ago quarter.
New Business
The total new business awards for the fourth quarter were $4.0 billion. North American Public Sector (NPS) contributed approximately $0.9 billion; Business Solutions & Services (BSS) reported $1.1 billion and the Managed Services Sector (MSS) secured $2.0 billion of new business.
New business awards for the full year of $14.0 billion were comprised of $5.5 billion from NPS, $3.5 billion from BSS, and $5.0 billion from MSS.
Guidance
The company provided its guidance for fiscal year 2012. Accordingly, Computer Sciences expects new business awards in excess of $17 billion, revenue of approximately $16.2 - $17.0 billion, operating margin of between 8.75% and 9.25% and EPS of approximately $4.70 - $4.80. Free cash flow is expected to be equal to or greater than 90% of net income for the year.
Our Take
CSC reported mediocre fourth quarter 2011 results. We are apprehensive about the intense competition in the IT and cloud computing space from both small and big players such as Accenture (NYSE: ACN) and Hewlett-Packard Company (NYSE: HPQ). Moreover, with government orders expected to dry up to a certain extent and the NHS realization getting pushed to future quarters, things look difficult for Computer Sciences.
Moreover, the demand for the company's products in Europe is not encouraging for the upcoming quarters.
The company has a Zacks #5 Rank, implying a short-term Strong Sell rating.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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