CHICAGO, Jan. 25, 2011 /PRNewswire/ -- Zacks.com Analyst
Blog features: Motorola Solutions Inc. (NYSE: MSI), Nokia
Corp. (NYSE: NOK), Siemens AG (NYSE: SI), Stryker
Corporation (NYSE: SYK) and Boston Scientific (NYSE:
BSX).
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Here are highlights from Monday's Analyst Blog:
Neutral on Motorola Solutions
We initiate coverage on Motorola Solutions Inc. (NYSE:
MSI) with a Neutral recommendation. Motorola Solutions is a market
leader in the lucrative Public Safety market. Several industry
researchers estimate that the market size of Public Safety may
reach $6.5 billion in 2014.
Most of the products of Motorola Solutions are based on the
state-of-the art wireless broadband mobility solutions architecture
of the former Motorola Inc. We believe the company will maintain
its current top-line growth in future primarily due to an improving
global economy that will sustain both government and enterprise
spending.
Motorola Solutions caters to a large set of industries including
Transportation & Logistics, Hospitality, Public Safety, Retail,
Wholesale Distribution, Oil & Natural Gas, Utilities, to name a
few. After the spin-off, the company has a solid net cash position
of $2.7 billion.
Recently, Standard & Poor's Rating Services raised its
corporate credit and senior unsecured ratings on Motorola Solutions
to "BBB" from "BB+". Fitch Rating also upgraded the company's
long-term issuer default rating to "BBB" from "BBB-" and provided a
stable outlook.
The strong cash balance of the company will further get boosted
once Nokia Siemens Networks, a joint venture between Nokia
Corp. (NYSE: NOK) and Siemens AG (NYSE: SI) completes
its proposed acquisition of the wireless infrastructure businesses
of Motorola Solutions.
This includes all of GSM, CDMA, and WCDMA networks as well as 4G
WiMAX and LTE networks. Motorola will receive $1.35 billion from this deal including
$1.2 billion from Nokia Siemens
Networks and the rest $150 million
from retained accounts receivables. The deal is expected to close
by the first quarter of 2011.
Nevertheless, Motorola Solutions is heavily dependent on
Government expenditures for its revenue. Approximately 65% of total
sales of Motorola Solutions comes from government agencies.
Although we do not suspect any near-term dip in government
expenditures, we remain concerned that any macro-economic
fluctuations may make the company's top-line volatile.
Earnings Preview: Stryker
Orthopedic devices giant Stryker Corporation (NYSE: SYK)
is expected to release its fourth quarter and fiscal 2010 results
on January 25, after the closing
bell. The Michigan-based company
announced, on January 10, encouraging
preliminary sales data for the quarter and fiscal year, which beat
the Zacks Consensus Estimates. Revenues for both fourth quarter and
fiscal 2010 grew nearly 9% to $2
billion and $7.32 billion,
respectively.
Global Orthopedic Implants sales grew 4.5% in the fourth quarter
reflecting signs of recovery in this business. Hips, knees and
trauma franchises posted growth in the quarter while the spine
business continued to disappoint. Worldwide revenues for MedSurg
Equipment, Stryker's growth business, soared roughly 15% in the
quarter.
Stryker raised its adjusted earnings guidance for fiscal 2010,
which it now envisions to range between $3.31 and $3.33 a share compared to the earlier
view of $3.27 and $3.30. Moreover, the company has released a
buoyant outlook for fiscal 2011. The current Zacks Consensus
Estimates for fourth quarter and fiscal 2010 are 90 cents and $3.31,
respectively.
Third-Quarter Flashback
Stryker posted better-than-expected third quarter 2010 results
with earnings of 80 cents per share
surpassing the Zacks Consensus Estimate of 77 cents. Net income jumped 47.5% year over year
led by sustained healthy sales from the MedSurg division.
Revenues grew 6.9% year over year to $1,768 million, also exceeding the Zacks
Consensus Estimate of $1,749 million.
However, strong growth at MedSurg was partly masked by yet another
sluggish performance by the core Orthopedic division due to weak
spine and knees sales.
Stryker's domestic sales benefited in the quarter from higher
shipments of orthopedic implants and surgical equipment while
international revenue growth was muted on account of an unfavorable
foreign exchange translation effect.
Estimate Revisions Trend
Agreement
Earnings estimates for fourth-quarter 2010 have been static over
the past week with no movements in either direction. However, there
has been a clear upswing over the last 30 days, mostly attributable
to the strong preliminary sales and the company's upbeat
guidance.
Out of 27 analysts covering the stock, 11 have raised their
estimates over the past month with just 1 moving in the opposite
direction, manifesting a strong directional consensus. The analysts
are expecting Stryker to outperform based on the solid revenue
performance.
Similarly, for fiscal 2010, 13 out of 21 analysts have hiked
their forecasts over the last 30 days while 1 lowered his/her
estimate. There has been a solitary positive revision over the past
7 days with no reverse movements.
Magnitude
The magnitude of revisions for the forthcoming quarter and
fiscal year has been torpid over the last week. However, a plethora
of upward estimate revisions accompanied by a sheer directional
pressure have led to an increase in the estimates for the fourth
quarter and fiscal 2010 by 1 cent and
2 cents, respectively, over the past
30 days.
With respect to earnings surprises, Stryker has posted two
positive surprises in the preceding four quarters while it met the
Zacks Consensus Estimates on two other occasions. The company has
produced an average positive earnings surprise of 3.23% over the
last four quarters, implying that it has beat the Zacks Consensus
Estimate by that measure.
Neutral on Stryker
Stryker is one of the world's largest medical devices companies
with a well-diversified product portfolio. It continues to expand
its product range by acquiring complementary products/businesses.
Stryker remains well positioned for growth across its Orthopedic
and MedSurg units driven by new product launches, acquisitions and
an improving hospital capital spending backdrop.
The company's MedSurg division continues to grow at a healthy
double-digit rate, benefiting from the synergies of the acquisition
of Ascent Healthcare. The MedSurg business continues to show
resilience in a still challenging macroeconomic backdrop.
With the sale of its bone growth product franchise ("OP-1"
product line) to Tokyo-based
equipment manufacturer Olympus Corporation, Stryker plans to
redirect a part of the related R&D spending to other internal
projects, which it believes has the potential to deliver better
returns.
Moreover, Stryker remains committed to delivering incremental
returns to investors leveraging its solid balance sheet, healthy
free cash flow and earnings power. The company, in December 2010, raised its quarterly dividend by
20% and announced an additional $500
million share repurchase program.
Stryker recently unfolded an optimistic outlook for fiscal 2011
with revenues expected to grow 11-13% in constant currency on the
back of higher shipments of Orthopedic Implants and MedSurg
Equipment coupled with the contribution from its recently acquired
neurovascular business of Boston Scientific (NYSE: BSX).
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