Zacks Equity Research highlights Entergy Corp. (NYSE: ETR) as the Bull of the Day and Embarq (NYSE: EQ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Johnson Controls, Inc. (NYSE: JCI), Intevac (Nasdaq: IVAC) and Burlington Northern Santa Fe (NYSE: BNI).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2676.
Here is a synopsis of all five stocks:
Bull of the Day: Entergy Corp. (NYSE: ETR)
Entergy is shifting towards becoming a fundamentally strong electric energy utility with the separation of its nuclear business. Its core business shows strong earnings growth, cash flow generation, favorable regulatory rate hikes, a reasonable valuation and steady recovery from hurricane damage during September 2007. Therefore, we reiterate our Buy recommendation on ETR with a six-month target price of $130.00.
Bear of the Day: Embarq (NYSE: EQ)
We maintain our Sell rating for Embarq based on lower than expected revenue trends through 2008. We believe that the local phone business in North America, in particular service offered by regional carriers, has significant challenges ahead as local access lines continue to decline and as consumers and business customers transition to alternative solutions, including VoIP, wireless and cable offerings. We also believe pricing pressure and the need to invest further in broadband infrastructure may strain overall operating margins, impacting various earnings metrics.
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Johnson Controls, Inc. (NYSE: JCI)
We rate Johnson Controls a Hold, as anemic demand, high inventory levels and continuous loss of market share at original equipment manufacturers keep plaguing the diversified manufacturer. The company is experiencing weakness in North America, following a general softness in the industry. Although it has a healthy backlog that would drive automotive sales in the long run, launch costs could weigh on near-term results. A weak product mix is also affecting Johnson Controls.
Intevac (Nasdaq: IVAC)
We believe Intevac’s foray into the semiconductor capital equipment market is still in its early stages, and the disk-drive component maker will need to invest in this business over the coming few years to be successful. The current challenging economic environment makes it a difficult time for entering the business as demand for equipment is waning. Although the future is bright for imaging, Intevac’s recent entry into the segment may not be able to offset declining revenue from slowing sales of its 200 Lean magnetic disk sputtering systems.
Burlington Northern Santa Fe (NYSE: BNI)
We are continuing our Hold on Burlington Northern Santa Fe Corporation, but increasing our target price to $110. BNI reported 2008 first quarter diluted EPS of $1.30, up 18% year over year and $0.08 above the $1.22 consensus and Zacks estimates, as revenues came in higher than we expected due to record quarterly revenue growth and volumes for Ag Products and Coal. We are raising our 2008 diluted EPS estimate to $6.05 from $5.90, a bit higher than the company's earnings guidance of roughly $6.00 per share. Revenues should benefit from fuel surcharges and rate increases, partially offset by significantly higher unhedged fuel costs and flat-to-modestly-lower volumes. We believe BNI's $1.28 annual dividend is safe.
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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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