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: Texas Instruments (NYSE: TXN), Ericsson (NASDAQ: ERIC), Motorola (NYSE: MOT), Walter Industries, Inc. (NYSE: WLT), and AAR Corp. (NYSE: AIR).
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Here are highlights from Wednesday’s Analyst Blog:
Texas Instruments: 2 Trends
Texas Instruments (NYSE: TXN), or TI, has been integrating different functionalities into single devices, encouraging customers to go for the simpler, more power efficient and smaller form factor products that could potentially lower the cost of ownership and enable adoption in the smallest of applications. For TI, this increases the dollar content per device, thus helping share gains and margin expansion.
Growth in the communications infrastructure market has been tempered by consolidations and regulatory pressures. The recession started deepening just as the infrastructure market was turning around. However, TI remains very strongly positioned to benefit from the development of the 3G buildout.
Although the company lost share at Ericsson’s (NASDAQ: ERIC) initial 3G platform, TI has a win for the next generation product. Management expects this to translate back into share gain towards the end of fiscal 2009.
The Motorola (NYSE: MOT) platform will bring additional revenue in 2009. Therefore, this business will begin to look up by the end of the year. Nearly half of TI’s revenue is derived from the communications market, and the long-term prospects of this market are very good.
Walter Inds Initiated a Buy
We are initiating coverage on Walter Industries, Inc. (NYSE: WLT) with a Buy recommendation and a target price of $32.00 per share. WLT should realize solid pricing and margins in 2009 as it produces some of highest quality low-volume met [metallurgical] coal in the world.
The company has around half of its met sales tonnage in 2009 priced at $225/Ton FOB Port. Economic stimulus efforts around the globe should start to take shape toward the end of 2009, thus creating demand for commodities (e.g. steel and met coal).
Keeping a Hold on AIR
AAR Corp. (NYSE: AIR) reported Q3-09 results. Revenues of $338.8 million (we had forecast $349 million) were down by 10.0%. Operating Income was off by 22.4% as the Operating Margin declined from 10.1% to 8.7%. Net Income was essentially flat, but only because the Tax Rate dropped from 35.0% to 27.0%. EPS were also just about flat at 48¢ (our estimate was 45¢; if the Tax Rate hadn’t dropped, the EPS would have been 43¢).
Aviation Supply Chain Sales were off by 8.3% to 138.7 million, MRO [maintenance, repair and operation] Sales rose by 2.9% to $77.0 million and Structures & Systems Sales rose by 8.7% to $120.0 million.
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