CHICAGO, July 14, 2011 /PRNewswire/ -- Zacks.com announces
the list of stocks featured in the Analyst Blog. Every day the
Zacks Equity Research analysts discuss the latest news and events
impacting stocks and the financial markets. Stocks recently
featured in the blog include: Freeport-McMoRan Copper & Gold
Inc. (NYSE: FCX), Newmont Mining Corp. (NYSE:
NEM), Southern Copper Corp (NYSE: SCCO), Seagate
Technology Plc (Nasdaq: STX) and Western Digital
Corporation (NYSE: WDC).
(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)
Get the most recent insight from Zacks Equity Research with the
free Profit from the Pros newsletter:
http://at.zacks.com/?id=5513
Here are highlights from Wednesday's Analyst Blog:
Freeport Workers Resume Work
Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX)
employees finally ended their eight day long strike at massive
Grasberg mine in Indonesia and
resumed work. Previously, thousands of Freeport workers went on strike demanding
higher wages and protesting the dismissal of their union
leaders.
The strike paralyzed the output at the remote Grasberg mine,
which contains the world's largest recoverable reserves of copper
and the biggest single gold reserve. It also stopped loading of
metal concentrate and unloading of food and fuel at the company's
port in eastern Papua
province.
The workers are demanding a wage increase of $1.80 to $15.00 per
hour since the other Freeport
workers around the world are paid at least $15–30 per hour.
The company is working diligently with the union and employee
leadership to resolve this issue.
In April 2011, the company
released its first-quarter 2011 earnings. It posted a net income of
$1.5 billion or $1.57 per share in the first quarter of 2011,
outshining the Zacks Consensus Estimate of $1.26 per share and the year-ago net income of
$897 million or $1.00 per share.
Quarterly revenues of $5.7 million
surpassed the Zacks Consensus Estimate of $5.39 million and were up 30.9% year over
year.
At the Indonesia Mining division, copper sales were lower at 278
million pounds in the first quarter of 2011 versus sales of 296
million pounds in the prior-year quarter primarily due to the
timing of shipments. Gold sales however approximated first-quarter
2010 sales.
In 2011, Freeport expects to
sell 3.9 billion pounds of copper, 1.6 million ounces of gold and
73 million pounds of molybdenum. For the upcoming quarter, the
company projects sales of 965 million pounds of copper, 365
thousand ounces of gold and 17 million pounds of molybdenum.
The company expects average copper prices of $4.25 per pound, $1,400 per ounce of gold and $15 per pound of molybdenum for fiscal year
2011.
Operating cash flows are estimated to be $8.3 billion in 2011.
Freeport expects capital
expenditures of $2.5 billion in 2011,
of which $1.3 billion is expected to
be spent on major projects including underground development
activities at Grasberg, construction activities at the Climax
molybdenum mine and completion of the initial phase of the sulfide
ore project at El Abra. In addition, Freeport is considering additional investments
at several of its sites.
Freeport has a short-term (1 to
3 months) Zacks #3 Rank (Hold) and a long-term Neutral
recommendation.
The company faces stiff competition from Newmont Mining
Corp. (NYSE: NEM) and Southern Copper Corp. (NYSE:
SCCO).
Earnings Preview: Seagate
Seagate Technology Plc (Nasdaq: STX) is scheduled to
announce its fourth quarter 2011 results on July 20, 2011 and the modest revision in
estimates reflects some key changes in the company's future
business prospects.
Agreement of Analysts
Out of the 29 analysts providing estimates for the fourth
quarter, five analysts revised their estimates upward over the last
thirty days. Out of the eighteen analysts providing estimates for
next quarter, five analysts increased their estimates in the last
thirty days while none moved in the opposite direction. For fiscal
2011, four analysts made upward revisions while for fiscal year
2012, two analysts made upward revisions, with two others moving in
the opposite direction over the last thirty days.
Some analysts believe that pricing is a real positive factor,
with stability in the channel perhaps spilling over into OEM
negotiations for the next quarter. Pricing has been firm in the
channel throughout the quarter, while price increases have been
staggering over the last several weeks, resulting in flat to
slightly up channel pricing on an absolute basis versus expectation
of normal sequential declines. In addition, it appears that HDD
vendors will attempt to stabilize pricing with OEM customers for
the upcoming September quarter. This will likely ensure that demand
forecasts remain in line with expectations.
Some analysts believe that by the end of September, TAM is
expected to be roughly 165M with upside possible to 170M if
components are available. Pricing will likely rise for OEMs once
again due to constraints, partly mitigated by stable conditions in
the channel. Moreover, the analysts also expect GM to rise
sequentially for STX and WDC.
Some analysts also expect the full year HDD between 3-5%
compared with the earlier projection of 7%. Moreover, the Seagate
estimates are also revised for an assumed slower buyback level
until the Samsung (N/R) acquisition is completed.
Both Seagate and WD announced this week that EU intends to
conduct more in-depth review of their proposed acquisitions of
Samsung and HGST. We note that this was fully expected, and that
even with the additional reviews, the deals remain on track to
close by the end of this year.
Moreover, the analysts also believe that Seagate's June quarter
will be strong, with solid upside potential unless any major issues
arise in June . It is expected that Seagate will capitalize on the
ongoing industry consolidation, although there is some fear that
Seagate's free cash flow potential may be affected post-merger.
Some are of the opinion that Seagate should be able to expand
margins and deliver very attractive ROIC.
Magnitude of Estimate Revisions
Since the third quarter earnings release, the magnitude of
revisions has been modest. Overall, estimates for the upcoming
quarter inched up to 24 cents from
23 cents in the last 30 days while
the Zacks Consensus Estimate reduced by 4
cents over the past 90 days.
For fiscal 2011, estimates have increased from $1.18 to $1.19 over
the last 30 days. However, estimates have dipped by 6 cents in the last 90 days. For 2012, estimates
have gone down from $2.00 to $1.93
over the last 90 days, while it reduced by 2
cents over the last 30 days.
Third Quarter Overview
The company reported dismal third quarter 2011 results. Earnings
per share (EPS) of 25 cents missed
the Zacks Consensus Estimate of 27
cents. The third quarter earnings were also below the
year-ago quarter level.
Seagate reported revenue of $2.70
billion in the third quarter, down 11.6% from $3.05 billion in the year-ago period. The
quarter's revenue was in line with the higher end of the company's
guided range. The company shipped 49.0 million disk drive units in
the third quarter, compared with 50.3 million units in the year-ago
quarter. The decline in shipments was due to preferential shift
toward flash drives from traditional hard drives.
Operating income on a GAAP basis was $179.0 million, down 68.0% from $560.0 million reported in the year-ago quarter.
The GAAP operating margin was 6.6% compared with 18.4% in the
year-ago quarter. Excluding restructuring charges and amortization
of purchased intangible assets, non-GAAP operating income was
$182.0 million, down 68.2% year over
year. Non-GAAP operating margin was 6.8% versus 18.8% in the
year-earlier quarter.
Cash, cash equivalents, restricted cash and short-term
investments totaled approximately $2.58
billion at the end of the March quarter, down from
$2.91 billion in the previous
quarter. Accounts receivables remained flat sequentially at
$1.39 billion and inventories
increased $26.0 million from the
previous quarter to $834.0
million.
Recommendation
We believe that Seagate's strong foothold in the Enterprise SSD
market will enable it to generate solid revenue growth in fiscal
2011 and beyond, which in turn will drive margins. Improving
supply-demand balance in the HDD industry will also act as a
catalyst.
We also believe that the company's decision to buyback shares
and pay out dividends will be welcomed by income-seeking investors.
But weakness in the consumer segment, price erosion, rising demand
for flash drives and competitive pressures from Western Digital
Corporation (NYSE: WDC) keep us on the sidelines.
Currently, Seagate has a Zacks #3 Rank, implying a short-term
Hold rating.
Want more from Zacks Equity Research? Subscribe to the free
Profit from the Pros newsletter: http://at.zacks.com/?id=5515.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and
qualitative analysis to help investors know what stocks to buy and
which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly
traded stocks. Our analysts are organized by industry which gives
them keen insights to developments that affect company profits and
stock performance. Recommendations and target prices are six-month
time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides
highlights of the latest analysis from Zacks Equity Research.
Subscribe to this free newsletter today:
http://at.zacks.com/?id=5517
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc.,
which was formed in 1978 by Leon
Zacks. As a PhD from MIT Len knew he could find patterns in
stock market data that would lead to superior investment results.
Amongst his many accomplishments was the formation of his
proprietary stock picking system; the Zacks Rank, which continues
to outperform the market by nearly a 3 to 1 margin. The best way to
unlock the profitable stock recommendations and market insights of
Zacks Investment Research is through our free daily email
newsletter; Profit from the Pros. In short, it's your steady flow
of Profitable ideas GUARANTEED to be worth your time! Register for
your free subscription to Profit from the Pros at
http://at.zacks.com/?id=5518.
Visit http://www.zacks.com/performance for information about the
performance numbers displayed in this press release.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook:
http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Disclaimer: Past performance does not guarantee future results.
Investors should always research companies and securities before
making any investments. Nothing herein should be construed as an
offer or solicitation to buy or sell any security.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
http://www.zacks.com
SOURCE Zacks Investment Research, Inc.