CHICAGO, March 28, 2011 /PRNewswire/ -- Zacks.com Analyst
Blog features: Accenture plc (NYSE: ACN), International
Business Machine Inc. (NYSE: IBM), Medtronic
(NYSE: MDT), Boston Scientific (NYSE: BSX) and St. Jude
Medical (NYSE: STJ).
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Here are highlights from Friday's Analyst Blog:
Accenture Beats, Raises Outlook
Accenture plc (NYSE: ACN) reported second quarter 2011
earnings per share (EPS) of 75 cents,
beating the Zacks Consensus Estimate of 71
cents. The quarter's earnings increased 25.0% from the
year-ago quarter, attributable to higher revenues and margins as
well as a lower share count and tax rate, partially offset by
unfavorable foreign-exchange rates. Shares jumped 5.33% in the
after-hour trade.
Guidance
For the third quarter of fiscal 2011, Accenture expects net
revenue in the range of $6.3 billion to $6.5
billion. This figure was arrived at after taking into
consideration a 4% positive foreign-exchange impact. The Zacks
Consensus Estimate was for earnings of 85
cents.
Accenture assumes a positive foreign-exchange impact of 2% for
its full-year revenue forecast. For fiscal 2011, the company
expects net revenue growth in the range of 11.0% to 14.0%, up from
the previously announced range of 8.0% to 11.0%. Expectations for
new bookings were maintained in the range of $25.0 billion and $28.0
billion, though management remains somewhat concerned about
contribution from Japan. The
company also reiterated its operating margin guidance at 13.6% to
13.7% and annual tax rate at 28.0% to 29.0%. Diluted EPS
expectation has been upgraded to $3.22–$3.30 from the previously guided range of
$3.08–$3.16. The earnings guidance
surpassed the Zacks Consensus Estimate of $3.16.
Accenture also forecast operating cash flow in the range of
$2.8–$3.0 billion (previously
$2.7–$2.9 billion); property and
equipment additions of roughly $420.0
million (previously $340.0
million); and free cash flow in the range of $2.4 billion to $2.6 billion
(reiterated).
Recommendation
We believe that second quarter results are encouraging, as the
bottom line strongly beat the Zacks Consensus Estimates. Based on
improving business momentum and market share gains, Accenture
raised its revenue and earnings guidance for fiscal 2011. Moreover,
we are encouraged by the steady flow of new business, and believe
that the trend will likely continue.
Apart from this, we remain encouraged with Accenture's deal wins
from various industry verticals. We also appreciate successive
acquisitions by Accenture as these enrich the company's product
portfolio. However, increasing competition from International
Business Machine Inc. (NYSE: IBM) may temper growth
prospects to some extent.
Currently, Accenture has a short-term Buy recommendation,
implying a Zacks #2 Rank.
FDA Approves MDT Device
In a positive development for Medtronic's (NYSE: MDT)
Cardiac Rhythm Disease Management ("CRDM") segment, the US Food and
Drug Administration (FDA) has approved its Consulta and Syncra
cardiac resynchronization therapy-pacemaker (CRT-P) systems.
Medtronic plans to begin the shipment of the products in the
immediate future.
For the first time, these two CRT-Ps will include 'Leadless ECG
Waveform' and will work together with Medtronic's Care Link Network
device data monitoring system in order to recommend the chance of
remote follow -up in patients implanted with the newly approved
systems.
Moreover, Consulta will also include Medtronic's OptiVolFluid
Status Monitoring and Complete Capture Management to detect the
risk of acute heart failure in patients well in advance as well as
ensure greater longevity of the machine. This entire product line,
under the CRDM segment, will offer a more superior system with
greater efficiency and user-friendly features.
The CRDM business, which constitutes a significant 30% of
Medtronic's total revenues, declined 2% year over year during the
third quarter of 2011 due to slower market growth and pricing
pressure. This included a 5% decline in revenue from pacemakers in
the U.S. and a 5.4% decline in the international market. However,
the extent of the decline in the quarter was less on a sequential
basis.
Medtronic has adopted several strategic initiatives to reinforce
its leadership in the fiercely competitive medical devices industry
as it battles for market share with other major players such as
Boston Scientific (NYSE: BSX) and St. Jude Medical
(NYSE: STJ). Given the huge potential in the cardiac
resynchronization therapy market, Medtronic has been reallocating
resources towards emerging therapies to drive growth. The FDA
approval, in this regard, is expected to add to the fortunes of its
CRDM unit.
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