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Amazon, Advance Auto Parts, BlackBerry, Apple And Alphabet Highlighted As Zacks Bull And Bear Of The Day

Published 07/05/2016, 09:30 PM
Updated 10/23/2024, 11:45 AM
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For Immediate Release

Chicago, IL – July 06, 2016 – Zacks Equity Research highlights Amazon (NASDAQ:AMZN) (AMZN) as the Bull of the Day and Advance Auto Parts (AAP) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on BlackBerry Ltd. (BBRY), Apple Inc (NASDAQ:AAPL). (AAPL) and Alphabet (NASDAQ:GOOGL) Inc. (GOOGL).

Here is a synopsis of all five stocks:

Bull of the Day :

As Amazon (AMZN) finally starts turning the valves on profit and generating strong new sources of revenue through AWS, the numbers are impressive.

This year's estimated sales haul is expected to top $134 billion, representing 25.5% annual growth.

And the EPS growth shows more of those sales hitting the bottom line with 330% projected profit acceleration.

It was the bump in the 2016 EPS consensus from $4.60 to $5.38 in the past 90 days that kept AMZN shares a Zacks #2 Rank or higher in the second quarter.

Now, with the upward nudge for 2017 estimates from $9.64 to $9.82, representing 83% EPS growth for next year, AMZN is back to a Zacks #1 Rank.

Amazon Smashes 1Q Earnings Estimates, AWS Still The Star

Amazon’s first-quarter EPS of 1.07 beat the Zacks Consensus Estimate of $0.61 by 75%. The North America and AWS segments were strong contributors to profits while investments in international continued. Non operating income also increased.

The company continued to impress investors as a leading provider of cloud infrastructure services to enterprise customers. The Amazon Web Services (AWS) business generated revenue of $2.56 billion in Q1, growing at over 60% year over year in each of the last four quarters.

Even more encouraging is the fact that AWS generates much stronger margins than the traditional retail business, which should remain a positive for the company’s profitability as it continues to grow in the mix.

This is despite the fact that Amazon has been consistently slashing prices to deal with growing competition, particularly from Microsoft (NASDAQ:MSFT) and Google. This business is a major reason for the upward revision to analyst estimates since the company last reported earnings.

And the optimistic analyst outlook our AWS is projected into 2017 with 20% projected sales growth of over $160 billion.

Bear of the Day:

Advance Auto Parts (AAP) is a Zacks #5 Rank (Strong Sell) whose shares may be in for a fall as they just hit an eight-month resistance ceiling at $165 and earnings estimates continue to come down.

In the last 60 days, full year 2016 EPS estimates have dropped from $8.81 to $7.80. And 2017 profit projections fell from $9.78 to $8.67.

Here's the background on why analysts took EPS estimates down over 10% for the next two years...

On May 19, Advance Auto Parts reported a 5% increase in adjusted earnings to $2.51 per share in the first quarter of fiscal 2016 (ended Apr 23, 2016) from $2.39 in the prior-year quarter. However, the figure missed the Zacks Consensus Estimate of $2.61. Adjusted net earnings improved 5.5% to $186.1 million from $176.5 million in the first quarter of fiscal 2015.

Revenues dropped 1.9% year over year to $2.98 billion and fell short of the Zacks Consensus Estimate of $3.01 billion. The decline resulted from a fall in comparable store sales. Comparable store sales slipped 1.9% in the reported quarter as against 0.7% growth recorded a year ago. The drop in comparable store sales was due to service shortfall and lower demand resulting from unfavorable weather.

Guidance Lowered

Advance Auto Parts expects comparable store sales to be in the range of negative 3% to negative 5%, lower than the previous forecast of low-single digits growth. The revised outlook is based on the company’s performance in the reported quarter. The company no longer expects to achieve its adjusted operating margin target of 12% and free cash flow of $500 million.

Additionally, it expects to incur capital expenditures in the band of $260–$280 million in fiscal 2016. Income tax rate will likely be in the range of 37.5%–38%.

Additional content:

BlackBerry Kills Off Classic Smartphone, Stock Down 3%

On Tuesday, shares of smartphone maker BlackBerry Ltd. (BBRY) are falling, down over 3% in afternoon trading after the company announced it will discontinue the BlackBerry Classic, an iconic cell phone that was a popular choice among consumers before the touchscreen smartphone, and known for its iconic QWERTY keyboard.

Ralph Pini, Blackberry’s chief operating officer and general manager for devices, said in a blog post that “To keep innovating and advancing our portfolio, we are updating our smartphone lineup with state of the art devices. As part of this, and after many successful years in the market, we will no longer manufacture BlackBerry Classic.”

The Classic “has been an incredible workhorse device for customers, exceeding all expectations,” Pini continued. “But, [it] has long surpassed the average lifespan for a smartphone in today’s market. We are ready for this change so we can give our customers something better—entrenched in our legacy in security and pedigree in making the most productive smartphone.”

Classic owners should make sure to check with their carriers for device availability, or they can also purchase unlocked versions of Classic online while supplies last.

BlackBerry’s decision to stop producing the Classic smartphone has been a long time coming. In recent years, many businesses and consumers have ditched the BlackBerry in favor of Apple Inc.’s (AAPL) iPhone and Alphabet Inc.’s (GOOGL) Android-powered touchscreen smartphones. And just last week, Politico reported that the U.S. Senate will no longer issue BlackBerry devices to staffers.

BBRY stock is down nearly 30% this year, and currently sits at a #3 (Hold) on the Zacks Rank.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

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About the Bull and Bear of the Day

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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AMAZON.COM INC (AMZN): Free Stock Analysis Report

ADVANCE AUTO PT (AAP): Free Stock Analysis Report

APPLE INC (AAPL): Free Stock Analysis Report

BLACKBERRY LTD (BBRY): Free Stock Analysis Report

ALPHABET INC-A (GOOGL): Free Stock Analysis Report

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