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: Toyota Motor Corp. (NYSE: TM), Jamba, Inc. (Nasdaq: JMBA), AtheroGenics, Inc. (Nasdaq: AGIX), Vodafone Group Plc. (NYSE: VOD) and Xilinx, Inc. (Nasdaq: XLNX).
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Here are highlights from Tuesday’s Analyst Blog:
Toyota Feeling U.S. Slowdown
Toyota Motor (NYSE: TM) continues to expand its production capacity in a manner that increases efficiency and meets local demand, powering it to emerge as the world's financially strongest automaker. A strong presence in North America has been further consolidated by gaining market share from the leading U.S. automakers.
A sluggish U.S. economy, rising costs, pricing pressures, and huge capital expenditures prompt us to rate the stock a Hold with a six-month target price of $78.
Jamba Expected to Underperform
We maintain our Underperform rating on shares of Jamba (Nasdaq: JMBA). As with many fast-growing restaurant chains, the Emeryville, California-based company is suffering from the effects of uncontrolled growth that has led to the opening of under-performing locations and a loss of attention to both innovation and current consumer trends.
The management has formulated a turnaround plan that will curtail unit expansion until store level performance improves, retrench non-store level personnel, close 30 under-performing stores, innovate menu offerings, and build relevance and awareness through effective marketing. However, its efforts face strong headwinds from a cash-squeezed consumer and rising food costs, while the company faces a severe cash flow shortage that poses a risk of bankruptcy, in our opinion.
AGIX: No Near-Term Upside
AtheroGenics (Nasdaq: AGIX) just reported that top-line ANDES data showed a dose dependent response and statistically significant reduction in A1c at the six month period. However, we would categorize the reduction as only modest at 0.6% for the highest (150mg) dose, and continued signs of elevate liver activity give us cause to remain skeptical of the eventual commercial potential of AGI-1067.
Until a large development partner validates the program we choose to remain skeptical of AGI-1067. We are still not comfortable with the side effect profile on it, and with recent topline efficacy data showing only modest reduction in A1c levels, we are struggling to find exactly what differentiating characteristics AGI-1067 will contain in the approved label relative to other oral anti-diabetic medications.
Vodafone Grows Subscribers
We maintain our Buy recommendation for Vodafone (NYSE: VOD), the largest revenue generating international wireless carrier. The company's recent operating results are highlighted by healthy increases in mobile data usage and growth in subscribers across consolidated segments (notably in the emerging markets), offset by contraction of organic service revenue in core European markets.
Meanwhile, momentum is also building with deployment of Vodafone's 3G wireless services and the company's expansion initiative in emerging markets across Asia, Eastern Europe and Africa, primarily through acquisitions. Additionally, an attractive dividend payout and share repurchases emphasize the desire for improved shareholder return and support our valuation forecasts.
Xilinx Should Continue to Thrive
We believe Xilinx (Nasdaq: XLNX) is a play on the secular trend of PLDs [programmable logic devices] replacing ASICs [application-specific integrated circuits]. PLDs do not have high development costs. The hallmark of a PLD is its flexibility. When designs have to be altered, they can be re-programmed and brought to market faster. Changes can be made even when the devices are in the field.
For Q2 of fiscal 2009, management expects revenues to be up 1% to down 3% sequentially. September is a seasonally weak quarter for the company. Gross margin is expected to be in the range of 63%-64%. We have adjusted our FY2009 estimates accordingly. We continue to rate Xilinx a Buy.
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