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The Zacks Analyst Blog Highlights:Cisco Systems, Waddell & Reed Financial, Fortress Investment Group, Lazard and Och-Ziff Capital Management Group

CHICAGO, Feb. 11, 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 Cisco Systems (Nasdaq:CSCO-Free Report), Waddell & Reed Financial, Inc. (NYSE:WDR-Free Report), Fortress Investment Group LLC (NYSE:FIG-Free Report), Lazard Ltd. (NYSE:LAZ-Free Report) and Och-Ziff Capital Management Group LLC (NYSE:OZM-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 Monday's Analyst Blog:

Will Cisco (CSCO) Miss Earnings Estimates?

Cisco Systems (Nasdaq:CSCO-Free Report) is set to report second-quarter fiscal 2014 results on Feb 12. Last quarter, it posted a 2.1% positive surprise. Let's see how things are shaping up for this announcement.

Growth Factors This Past Quarter

The company's first-quarter earnings exceeded the Zacks Consensus Estimate by a penny. Revenues of $12.1 billion increased 1.8% year over year but were down 2.4% sequentially. Additionally, revenues increased year over year across most geographies, except Asia-Pacific Japan and China (collectively known as APJC) which declined 8.7% on a year-over-year basis.

The second quarter was strong for Cisco in terms of margin growth. This was mainly due to favorable product mix aided by lower variable expenses.

For the second quarter, Cisco expects revenues to decrease in the range of 8% to 10% on a year-over-year basis. The company expects non-GAAP gross margin within 61%–62%; non-GAAP tax rate of 21%, yielding non-GAAP earnings per share of 45 cents to 47 cents.

Earnings Whispers?

Our proven model does not conclusively show that Cisco Systems will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP:  Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 41 cents. Hence, the difference is 0.00%.

Zacks Rank #4 (Sell): We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Waddell & Reed Upped to Strong Buy

On Feb 6, Zacks Investment Research upgraded Waddell & Reed Financial, Inc. (NYSE:WDR-Free Report) to a Zacks Rank #1 (Strong Buy).

Rationale Behind the Upgrade

Waddell & Reed has been witnessing rising earnings estimates aided by strong fourth-quarter 2013 results. Moreover, this well-known investment manager has delivered positive earnings surprises in the trailing 4 quarters with an average beat of 7.4%. The long-term expected earnings growth rate for this stock is 20.2%.

Waddell & Reed reported its fourth-quarter results before the opening bell on Feb 2. Earnings per share of 92 cents outpaced the Zacks Consensus Estimate of 82 cents. The bottom line was also up 50.8% from 61 cents per share in the year-ago quarter.

Results primarily benefited from top-line growth driven by solid inflows across all the segments. As of Dec 31, 2013, assets under management (AUM) totaled $126.5 billion, up 31.3% from $96.4 billion as of Dec 31, 2012.

The Zacks Consensus Estimate for 2014 rose marginally to $3.63 per share over the last 7 days. For 2015, the Estimate rose 1.2% to $4.15 over the same time frame.

With alternate forms of investments gaining popularity, assets managers like Waddell & Reed will continue to reap benefits. Going forward, we expect an improvement in the top line to boost capital deployment activities.

Other Stocks to Consider

Apart from Waddell & Reed, other investment managers worth considering include Fortress Investment Group LLC (NYSE:FIG-Free Report), Lazard Ltd. (NYSE:LAZ-Free Report) and Och-Ziff Capital Management Group LLC (NYSE:OZM-Free Report). All these stocks carry the same Zacks Rank as Waddell & Reed.

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

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.

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