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Mon, August 30, 2010
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PACCAR, Valmont Industries, Dell, Hewlett-Packard and 3PAR
CHICAGO--([ BUSINESS WIRE ])--[ Zacks Equity Research ] highlights: PACCAR (Nasdaq: [ PCAR ]) as the Bull of the Day and Valmont Industries (NYSE: [ VMI ]) the Bear of the Day. In addition, Zacks Equity Research provides analysis on, Dell Inc. (Nasdaq: [ DELL ]), Hewlett-Packard & Co. (NYSE: [ HPQ ]) and 3PAR Inc. (NYSE: [ PAR ]).
Full analysis of all these stocks is available at [ http://at.zacks.com/?id=2678 ].
Here is a synopsis of all five stocks:
[ Bull of the Day ]:
We have upgraded our rating from Neutral to Outperform on PACCAR (Nasdaq: [ PCAR ]), a designer and manufacturer of premium light, medium and heavy duty trucks. PACCAR maintains a robust market share, bolstered by strong growth in Mexico and Australia.
In addition, its core business in Europe is improving. The company's profit improved significantly in the second quarter of 2010, based on strong truck sales in North America as well as a rise in Financial Services profits.
Furthermore, its cash flow nearly doubled during the first half of 2010. We set a target price of $53 for the stock.
[ Bear of the Day ]:
We are downgrading Valmont Industries (NYSE: [ VMI ]) to Underperform from Neutral and are also reducing our target price to $63.00 from $91.00 due to the company's muted second quarter 2010 profitability and poor topline growth. Valmont fell short of the Zacks Consensus Estimate by 39 cents.
Results were hurt by a subdued performance in the Utility Support Structures and Engineered Support Structures segments, caused by a weak commercial and residential construction market. Soft demand for wireless communication structures as well as poor federal spending on infrastructure led to lower revenues.
We do not expect any significant momentum in Valmont's major businesses until a new highway bill is passed. Our long-term Underperform recommendation on the stock indicates that it would perform below the market. Our $63.00 target price, based on 15.4x 2010 EPS, reflects this view.
Latest Posts on the Zacks [ Analyst Blog ]:
Dell & HP Bidding War Continues
The bidding battle between tech giants, Dell Inc. (Nasdaq: [ DELL ]) and Hewlett-Packard & Co. (NYSE: [ HPQ ]) to acquire 3PAR Inc. (NYSE: [ PAR ]) is likely to stretch longer than expected.
The tug-of-war between the tech titans is raising value for the shareholders of 3PAR, which has not been making much profit lately. The chase to tap new markets (beyond PCs) with huge growth prospects is the main reason for the bidding war.
The bidding started with Dell offering $18 a share, which was counter-bid by HP and Dell in rapid succession, with the final offer (so far) from HP coming in at $30 a share.
Looking Back
On August 16, Dell had signed a definitive agreement to acquire enterprise storage products manufacturer 3PAR Inc. in an all cash deal valued at $1.15 billion, or $18 per outstanding common share of 3PAR. The 3PAR deal would help to bolster Dell's competitiveness and profitability in the mid and high-end of the Fibre Channel SAN segment and strengthen its position for cloud and virtualized environments.
On August 23, HP made a counter-bid of $24 per 3PAR outstanding common share, which indicated a premium of 33% over Della™s offer price. With the acquisition, HP intends to strengthen its innovative Converged Infrastructure solutions by improving competitiveness of its storage portfolio.
On August 26, Dell announced that it raised its bid to $24.30 per share, marginally topping HPa™s offer, after which officials from Dell said that 3PAR had accepted the offer. Dell also increased its breakup fee to $72.0 million from $53.5 million in its prior offer, implying that 3PAR would have to pay $72.0 million in case it signs another deal.
Some analysts (UnionBankSwitz., Raymond James, R.W. Baird and BofA Merrill Lynch) were expecting a counter offer from HP, since 3PAR is the only pureplay, high-end Storage Area Network (SAN) player of significant size available for acquisition.
The analystsa™ expectations proved correct when HP bid up the price to $27 per share, representing a premium of 11% over Della™s most recent offer price. However, the analysts expected another move from Dell.
And sure enough, Dell matched HPa™s offer, after which HP offered $30 a share.
Where the Meat Is
3PAR is a global provider of virtualized storage solutions founded in 1999. The company provides highly-virtualized storage solutions with advanced data management features (dynamic tiering, thin provisioning, etc.) for cloud-computing environments. 3PARa™s high-end enterprise storage products compete with those from key players in the segment.
Get the full analysis of all these stocks by going to [ http://at.zacks.com/?id=2649 ].
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
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Updated throughout every trading day, the [ Analyst Blog ] provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.
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