CHICAGO, July 7, 2011 /PRNewswire/ -- Zacks Equity Research highlights Raven Industries (Nasdaq: RAVN) as the Bull of the Day and Tellabs Inc. (Nasdaq: TLAB) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Nokia Corp. (NYSE: NOK), Siemens AG (NYSE: SI) and Siemens AG (Nasdaq: ERIC).
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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:
Raven Industries (Nasdaq: RAVN) reported an EPS of $0.86 in the first quarter of fiscal 2012 versus $0.72 in the year-earlier quarter, outperforming the Zacks Estimate of $0.74. The improvement was largely driven by the double-digit growth in sales in the Applied Technology and Aerostar segment.
The company expects a record year in terms of sales and earnings, mainly driven by higher farm income. Given the company's investments and cost-effective products, more and more customers would turn to Raven. In the long-term Raven expects net income growth in the range of 12%-15%.
Thus, we reiterate our Outperform recommendation on the stock with a target price of $68.00. Our target price is 27.0x 2012 EPS, and reflects this recommendation.
We downgrade our recommendation on Tellabs Inc. (Nasdaq: TLAB) to Underperform backed by our assessment that the poor performance of the company will continue in the near future. First-quarter 2011 financial results were well below the Zacks Consensus Estimates and the second-quarter 2011 outlook provided by management was disappointing.
What is important is that Tellabs' globally reputed high-margin digital cross-connect products are also showing a downtrend. Therefore, gross margin of the company suffered a setback in the previous quarter and is expected to remain at low levels in the near term.
Tellabs is facing serious problems with its key customer AT&T, which accounts for 35% of total revenue in 2010. The company is aggressively targeting the mobile Internet market since its legacy switching products are gradually losing relevance. In the meantime, we do not find any immediate catalyst for Tellabs.
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Nokia-Siemens Wins Contract
Nokia Siemens Networks (NSN), a 50-50 joint venture between Nokia Corp. (NYSE: NOK) and Siemens AG (NYSE: SI) to provide telecom infrastructure solutions, recently won a contract to supply equipments for ongoing fiber-to-the-home (FTTH) network of Bulgarian Internet service provider EVO.bg. NSN will provide GPON solutions and supply customer premises equipments and the Optical Line Termination Unit. Using NSN platform, EVO will be able to expand its network capacity together with the enhancement of its high-speed broadband and IPTV offerings.
The east European countries became major growth driver for the fiber optic networks. A recent study conducted by research firm IDATE revealed that global subscriber base for FTTH and FTTB (fiber-to-the-building) will jump 227 million by the end of 2015 from 61 million by the end of 2010. We believe EVO contract will help NSN to solidify its footprint in the lucrative FTTH markets of east Europe, especially in Russia, Lithuania, Latvia and Estonia.
Recently, The Wall Street Journal reported that both Nokia and Siemens are at present trying to infuse more cash in their joint venture in order to revamp its businesses. For the last 6 months, NSN was looking for a third party investor in order to inject funds, thereby reducing the stake of both Nokia and Siemens. Early last month, The Financial Times reported that the two major U.S. private equity groups, Kohlberg Kravis Roberts and TPG, have backed out from their bidding for a significant stake in NSN.
The departure of these two private equity groups primarily resulted from disagreement between the firms and NSN over price and controlling stake of the venture. Nokia, however, announced that NSN is negotiating with several other investors. Despite being the second largest company in this field after LM Ericsson AB (Nasdaq: ERIC), NSN always remains in sticky wicket once it was formed in 2007.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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