CHICAGO, Oct. 4, 2012 /PRNewswire/ -- Zacks Equity Research highlights Gap, Inc. (NYSE:GPS) as the Bull of the Day and J. C. Penney Company (NYSE:JCP) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Abaxis, Inc. (Nasdaq:ABAX), MWI Veterinary Supply, Inc. (Nasdaq:MWIV) and IDEXX Laboratories, Inc. (Nasdaq:IDXX).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Based on strong second-quarter 2012 results, we have upgraded our long-term recommendation on Gap, Inc. (NYSE:GPS) to Outperform. Driven by increased sales, improved margins and lower share counts, Gap's earnings of $0.49 per share for the quarter surged 40% from the prior-year period and came ahead of the Zacks Consensus Estimate of $0.48.
Moreover, net sales increased 5.6% to $3,575 million during the quarter, primarily driven by a 4% increase in comparable store sales. Further, solid quarterly performance prompted management to raise its fiscal 2012 earnings guidance range to $1.95-$2.00 per share from $1.78-$1.83 forecasted earlier.
The company is in the midst of its international expansion strategy. Further, to counter the domestic market saturation, Gap is aiming total sales of approximately 30% from its overseas operations and online business by 2013.
J. C. Penney Company (NYSE:JCP) posted a second-quarter 2012 loss of $0.37 per share that fared worse than the earnings of $0.19 in the year-ago quarter and the Zacks Consensus Estimate of loss of $0.24. Following disappointing quarterly results, the company hinted that it will not achieve its earlier guidance of $2.16 per share for fiscal 2012. Total revenue also fell 22.6%, whereas comp sales slid 21.7%.
We observe that despite a well-diversified supplier base, the company has been struggling against other retail chains. In order to uplift itself and to become America's favorite store, J. C. Penney announced slew of measures, which include new pricing strategy, fresh logo, strategic merchandise initiatives, cost reduction and enhancement of customers shopping experience.
However, the dismal results dashed those hopes at least for the near term. Moreover, an erratic consumer behavior and a sluggish economic recovery still remain matters of concern. Consequently, we downgrade our recommendation on the stock to Underperform.
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Abaxis Inks Deal with MWI Vet
A definitive distribution relationship has been formed between Abaxis, Inc. (Nasdaq:ABAX) – a manufacturer of point-of-care blood analysis systems for medical and veterinary markets – and MWI Veterinary Supply, Inc. (Nasdaq:MWIV), a worldwide distributor of animal health products to veterinarians. Per the deal, effective January 2013, MWI Vet, as a business partner of Abaxis, will be able to store, market and promote the entire veterinary product line of Abaxis in the U.S.
We note that Abaxis' veterinary instruments cater to a substantial part of the clinical diagnostic requirements of veterinarians and the research marketplace. As per recent data, one third of the North American veterinarians practice working with Abaxis instruments for routine wellness testing and annual check-ups.
We believe that this is a large market with a high potential for growth. An increase in the number of households with pets, enhanced human-animal bonding, aging pet population, more focus on animal health or preventive care, and advancements in pharmaceuticals and diagnostic testing drive increased spending, which in turn is favorable for the company.
Abaxis is performing well in its veterinary division with an expanded product line and a growing direct sales force. The company also intends to introduce more rapid assay of products, which would boost the veterinary revenue. In the previous month, the company launched its new Kidney Profile Plus panel for the treatment of critical and chronic renal diseases in animals, especially in canine, feline and equine species.
Alongside, Abaxis Veterinary Reference Laboratories' ("AVRL") performance in the third full quarter of operations complemented growth of the company's veterinary segment. Abaxis is optimistic about its consistent performance in the veterinary market and expects to maintain this growth momentum in the upcoming quarters.
On the other hand, in a highly fragmented animal health products distribution market, MWI Vet is currently focused on preserving long-term customer relationships as well as building new ones. In August 2012, the company revised its distribution relationship with IDEXX Laboratories, Inc. (Nasdaq:IDXX), per which MWI Vet, as a business partner of IDEXX, will also be able to distribute other competitive diagnostic products.
Other than that, MWI Vet's long term distribution agreements include a 13-year contract with Banfield, the largest private veterinary practice in the U.S. The company also maintains a strong relationship with Feeders' Advantage, a buying group comprising several large cattle feeders in the U.S.
We believe that despite the veterinary market being highly competitive, strong bonding between vendors like Abaxis and distributors like MWI Vet will enable both the companies to achieve robust growth. The companies believe this new venture to significantly add synergies to their individual businesses.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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