Zacks Bull and Bear of the Day Highlights: Monster Worldwide, France Telecom, Google, Yahoo and Microsoft
Zacks Equity Research
For Immediate Release
Chicago, IL – December 11, 2012 – Zacks Equity Research highlights Monster Worldwide (MWW) as the Bull of the Day and France Telecom - ADS (FTE) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Google Inc. (GOOG), Yahoo (YHOO) and Microsoft (MSFT).
Earnings estimates have moved up significantly after Monster Worldwide (MWW) reported better-than-expected results for the third quarter of 2012. Monster announced a series of restructuring actions in order to focus on its core business and improve its cost structure. These initiatives are aimed at boosting profitability and cash flow.
The restructuring actions include the sale of the ChinaHR business and curtailing losses in developing markets. On the other hand, Monster is currently reviewing strategic alternatives to maximize shareholder value, which includes the possible divestiture of the company.
We believe the shares have already hit an all-time low and a gradual recovery hereafter is on the cards. Thus, we maintain our Outperform recommendation on the stock.
We are downgrading our recommendation on France Telecom - ADS (FTE) to Underperform from Neutral, following lackluster third quarter 2012 results. The company posted declining results for both earnings and adjusted EBITDA. Even revenue in France, the operator's largest market, dropped due to lower traditional telephone services.
Looking ahead, we expect the shares of the company to remain under pressure, owing to increased VAT rates, a persistent unfavorable economic environment, a poor fixed-line telephony business, lower mobile termination rates and strict regulatory measures across key European markets. Thus, the absence of any near-term strong driving catalyst compels us to have an apprehensive outlook on the company.
Hence, we downgrade our recommendation to Underperform from Neutral. The company has a price target of $9.75, based on 6.3x our 2012 EPADS estimate.
Google Inc. (GOOG), the world's most popular Internet search engine provider is making efforts to expand revenue beyond its core advertising services. Small businesses, which have been using the free version of Google Apps software so far, will now have to pay for the web-based office productivity suite.
Google Apps is a cloud-based productivity suite that helps people to work from anywhere on any device. Google Apps software includes email, word processing, spreadsheet and presentation tools.
Following the new move, businesses will have to bear a charge for using Google Apps Software. The company stated that firms with 10 or lesser number of employees will now have to pay $50 per user per year, the same amount that larger businesses pay for the apps. Individuals will still be able to access the free version of the products including Gmail but will be deprived of the additional services that the premium version offers.
Recently, Google said that its apps are used by more than 5 million businesses. Though the company has not disclosed the revenue generated by its enterprise business, it expects it to become an important part of Google's overall business going forward.
Google is a market leader in online advertising and it has been exploring various ways to increase its revenue beyond its core business. We believe this is Google’s latest move to increase its revenue in the face of cut-throat competition.
Google delivered a strong third quarter, with gross revenue touching a record $14.10 billion. Revenues, from both Google-owned and partner sites, continued to grow in double digits on a year-over-year basis. Historically, Google has always fared better than Yahoo (YHOO) search, which has been struggling for survival and Microsoft’s (MSFT) Bing, which is yet to gain critical mass.
However, legal entanglements related to competitive matters or patent infringements remain an overhang. Currently, Google retains a Zacks Rank #3 (Hold).
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
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