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SOURCE Zacks Investment Research, Inc.
CHICAGO, June 16, 2014 /PRNewswire/ -- Zacks Equity Research highlights Avago Technologies Limited (Nasdaq:AVGO-Free Report) as the Bull of the Day and Arctic Cat Inc. (Nasdaq:ACAT-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onPriceline.com (Nasdaq:PCLN-Free Report), Yelp (NYSE:YELP-Free Report), GrubHub (NYSE:GRUB-Free Report) and Groupon (Nasdaq:GRPN-Free Report).
Here is a synopsis of all five stocks:
Headquartered in San Jose, CA and Singapore, Avago Technologies Limited (Nasdaq:AVGO-Free Report) is a designer, developer and global supplier of a broad range of analog semiconductor devices and digital, mixed-signal and optoelectronics components and subsystems.
Avago started as HP semi division and was later a part of Agilent that was spun-off from HP. It was spun-off from Agilent in 2005 and had its IPO in 2009. Avago is currently the 9th largest semiconductor company (excluding memory business) in the world. The company makes radio frequency chips that are used in smartphones by Apple, Samsung and other mobile device manufacturers.
Avago products primarily serve four markets: Enterprise Storage (38% of FY 2013 revenue), Wireless Communications (25%), Wired Infrastructure (23%), and Industrial & Other (14%). It has a diversified revenue model with 37% of its FY 2013 revenue derived from China, 20% from North America, 10% from Europe and 33% from the rest of the world.
Headquartered in Thief River Falls, MN, Arctic Cat Inc. (Nasdaq:ACAT-Free Report) is a designer, manufacturer and marketer of All-terrain vehicles (ATVs) & Side-by-Sides, Snowmobiles, and Parts, garments & accessories.
During FY 2013, ATV and Side-by-Sides contributed 45% of sales and Snowmobiles accounted for 39%.
Disappointing Results and Downbeat Guidance
ACAT reported it Q4 FY 2014 results on May 15. Net loss for the quarter was $1.5 million or $0.12 per share, worse than the Zacks Consensus Estimate for a loss of $0.09 per share. This was ACAT's third consecutive quarterly miss.
The guidance provided by the management for full-year fiscal 2015 sales and earnings was also below street estimates. They expect sales to be in the range of $775 million to $786 million and earnings to be in the range of in the $2.33 to $2.43 per share.
Priceline Buys OpenTable For $2.6 Billion
Online travel booking company Priceline.com (Nasdaq:PCLN-Free Report) has expanded into restaurant reservations with the acquisition of OpenTable (OPEN) for $2.6 billion. The Boards of Directors of both companies have unanimously approved.
Priceline says that OpenTable connects 15 million people to 31K restaurants across the world with the help of its hardware and software solutions. The company is particularly strong in the mobile department, deriving 42% of North America reservations (that's 36% of total reservations) in the last quarter from mobile devices.
OpenTable generated just $53.8 million in revenue and 11 million in profits in the last quarter, which if annualized would fetch Priceline just $215 million in revenue and $44 million in profits. While 12X revenue is not a huge sum to pay considering the company's double-digit growth rate, but this would have little impact on Priceline, which reported revenue and profits of $1.64 billion and $360.7 million, respectively in the last-reported quarter itself.
So what could be the rationale for the deal? Priceline says it is OpenTable's restaurant marketing expertise, which makes sense because of the possibility of scaling up to increase penetration in North America and internationally (76% of OpenTable's restaurant inventory is in North America). Of course, it will also welcome the 15 million-odd customers and cross sell its travel bookings to those of them that don't already use Priceline.
OpenTable is getting $103 a share, or a 46.2% premium to yesterday's closing share price. So it's not surprising that shares opened at roughly that price this morning. Also not surprising is the fact that shares of its peers Yelp (NYSE:YELP-Free Report), GrubHub (NYSE:GRUB-Free Report) and Groupon (Nasdaq:GRPN-Free Report) are also soaring on chances of similar takeovers. Yelp shares opened 10% higher and are up over 12% since then. GrubHub shares opened nearly 8% higher and have climbed another 7%. Groupon shares opened around 4% higher and are up over 5% in early morning trade.
Both Priceline and OpenTable have a Zacks Rank #3 (Hold).
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