Zacks Equity Research highlights EPAM Systems (NYSE:EPAM–Free Report)as the Bull of the Day and Cree (Nasdaq:CREE–Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis ontheLinkedIn (NYSE:LNKD–Free Report), Facebook (Nasdaq:FB–Free Report) and Monster Worldwide (NYSE:MWW–Free Report).
Here is a synopsis of all five stocks:
EPAM Systems (NYSE:EPAM–Free Report) has a downright lousy history of beating the number, but that is about to change. This custom IT services and solutions provider has cracked the code and is our Bull of the Day.
Normally, if I see a CFO is leaving a company I tend to sell first and ask questions later. In the case of EPAM Systems, their CFO is leaving and being replaced by the current VP of Finance and compliance officer. So congratulations to Anthony Conte, a six year veteran of the company who has a firm grasp of what is going on at EPAM.
EPAM is an IT services and custom solutions provider. They offer software development services, engineering and custom solutions for medium and large businesses worldwide. The company primarily serves banking, financial services, business information, media, travel and hospitality industries. EPAM Systems, Inc. is headquartered in Newtown, Pennsylvania.
Cree (Nasdaq:CREE–Free Report) has posted two consecutive negative earnings surprises and has seen earnings estimates slide. The stock has a Zacks Rank #5 (Strong Sell) and is today’s Bear of the Day.
Just three short months ago, the prospects for CREE were much better. In fact the stock was a Zacks Rank #1 (Strong Buy) and was highlighted as the Bull of the day on July 16.
This was before the company posted two negative earnings surprises. Each miss was $0.02 in dollar terms and approximately -6% below the Zacks Consensus Estimate.
Cree makes lighting-class light emitting diode (LED), lighting, and semiconductor products for power and radio- frequency (RF) applications. Cree was founded in 1987 and is headquartered in Durham, North Carolina.
The company had a lot of earnings momentum heading into the summer. In February of 2012, the Zacks Consensus Estimate for 2013 stood at $1.37 and then bounced higher to $1.50 in March. The consensus kept rising and reached a peak of $1.59 in July. Then came the first of two earnings misses.
August saw the Zacks Consensus Estimate slide from the peak the previous month to $1.44. Two months later, estimates had again slipped to $1.32. That round trip move isn’t quite lights out, but prospects have clearly dimmed.
LinkedIn Beats Revs but Guides Lower
Professional network social media outlet LinkedIn (NYSE:LNKD–Free Report) reported earnings and sales after the bell Tuesday. Revenues were up higher than expected: $393 million in the September quarter, as opposed to the $384 million consensus.
But after-hours trading is down at this time. Following a 1.7% gain in regular trading (on a day when the NASDAQ set a new all-time high), traders in the late session sold off more than 7% of LNKD stock on the news at one point. The stock has since gained some of that back on heavy volume in the after-market.
Guidance for fiscal 2013 is $1.5 billion — the same as Zacks’ projections — but guidance for the 4th quarter is lower than expected: $415-420 million, down from the Zacks Consensus of $437 million for next quarter. With a young company like LinkedIn, a couple cents off the EPS here or there might be forgiven, but when it comes to lowered growth trajectories, not so much.
In fact, though growth rates for the company’s Q3 were up 56% year over year — obviously still quite good — that’s down from 59% the previous quarter and triple-digit growth rates before that. LinkedIn has become known in a general sense as “Facebook (Nasdaq:FB–Free Report) for Business” (though that’s admittedly an oversimplification), and building up its Talent Solutions, Marketing Solutions and Premium Subscription businesses quarter after quarter is crucial.
That goes especially for the fact that LinkedIn is currently trading at nosebleed multiples, and the stock is up 115% year to date. Just like Facebook, of course, stocks like LinkedIn are plays on the future of social media as an entity, including the delicate balance between a satisfying user experience and the ability to sufficiently monetize its services. We see trial balloons all over the place for new ways to get advertisers onto these popular sites, and LinkedIn is one of the most desirable destinations: the company now has 259 million members, up 38% year over year.
The upcoming conference call will likely be spent assuaging investors’ fears about dwindling growth and lowered revenue guidance. Perhaps the company is just being especially cautious, and may allow for sales to begin accelerating domestically and overseas as LinkedIn continues to target taking share from companies like Monster Worldwide (NYSE:MWW–Free Report).
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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