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The Zacks Analyst Blog Highlights: Apple, Google, China Mobile, Amazon.com and WellPoint

CHICAGO, Jan. 9, 2014 /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 the Apple (Nasdaq:AAPL-Free Report), Google (Nasdaq:GOOG-Free Report), China Mobile (NYSE:CHL-Free Report), Amazon.com (Nasdaq:AMZN-Free Report) and WellPoint Inc. (NYSE:WLP-Free Report).

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Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Wednesday's Analyst Blog:

Apple's App Store Sales Surge in 2013

Apple's (Nasdaq:AAPL-Free Report) App Store customers spent more than $10.0 billion in 2013. The company recently announced that December spending alone accounted for $1.0 billion. Customers downloaded almost 3 billion apps making it the most successful month in the company's history.

The strong growth in overall sales reflects Apple's success in building an iOS-based ecosystem that continues to attract app developers. Since the launch of App Store in 2008, Apple has paid almost $15.0 billion to developers, after deducting its 30% share. Apple is estimated to earn $3.0 billion in revenues from App Store in 2013.

The phenomenal success of App Store solidifies Apple's position against Google's (Nasdaq:GOOG-Free Report) Android platform. Similar to Apple's iOS ecosystem, the Android platform has also started attracting developers primarily due to the increasing sales of Android-based smartphones and higher number of apps download from Google Play store.

However, it has been noted that iOS users tend to spend more compared to Android users, making Apple's platform much more attractive to developers. According to IBM, iOS users spent $115.42 per order, compared to $83.56 per order by Android users during fourth-quarter 2013.

The higher spending is primarily driven by Apple's affluent customer base and partnerships with leading carriers. Moreover, customer engaging apps, such as the Candy Crush Saga, drove the higher sales.

We believe increasing iTunes sales (fastest growing segment in the fourth quarter) will boost Apple's top line in the long run. The company's recent partnership with China Mobile (NYSE:CHL-Free Report), revamped product line-up and strategic acquisitions will improve its competitive position against the likes of Samsung and Amazon.com (Nasdaq:AMZN-Free Report), going forward.

Nevertheless, falling gross margins and lack of innovation are expected to remain the primary headwinds in the near term.

Currently, Apple has a Zacks Rank #2 (Buy).

WellPoint Divests Non-Core Units

WellPoint Inc. (NYSE:WLP-Free Report) has recently announced a couple of agreements that reflect the company's strong focus on core business and its intent to capitalize on core growth opportunities. These announcements are related to the divestiture of two of its business units to enhance its insurance operations.

The first announcement is pertaining to the divestiture of its online contact lens retail subsidiary 1-800 CONTACTS to Thomas H. Lee Partners, one of the world's leading private equity firms. Although the financial terms of the transaction were not disclosed, management stated that the proceeds from the deal that is slated to culminate in the first quarter of 2014 will be used to fund WellPoint's capital deployment initiatives.

Although the 1-800 CONTACTS subsidiary is a well-known name in the contact lens retail space, WellPoint decided to opt for the divestiture as it strives to enhance its core operations. And now with the changes that are scheduled to come to the health care system, the company is all the more focused to capitalize on the opportunities by divesting its non-core operations and fortifying its commercial and government business segments.

Concurrently, WellPoint also announced its intention to divest its eye glasses business – glasses.com to one of the premium eyewear company, Luxottica Group. The terms of the deal were not disclosed. This deal is pending regulatory approval and is scheduled to close in the first quarter of 2014.

The company expects to incur an impairment charge of around 52–57 cents per share in the fourth quarter of 2013, pertaining to these divestitures. As a result, WellPoint now estimates full-year 2013 GAAP net income to be at least $7.88 per share while adjusted net income outlook was retained at a minimum of $8.40 per share. However, we remain optimistic on the company's performance owing to its strong financial position and efforts to improve memberships. Thus, our projected adjusted net income is pegged a little higher than the company outlook and the Zacks Consensus Estimate for full-year 2013 at $8.51.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

 

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