For Immediate Release
Chicago, IL – November 16, 2011 – Zacks Equity Research highlights Sunoco Logistics Partners, LP (SXL - Analyst Report) as the Bull of the Day and Gentiva Health Services as the Bear of the Day. In addition, Zacks Equity Research provides analysis on MasterCard Inc. (MA - Analyst Report), Intel Corporation (INTC - Analyst Report) and Visa Inc. (V - Analyst Report).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Bull of the Day:
Buoyed by a robust operating performance and favorable growth prospects, we are maintaining our Outperform recommendation on Sunoco Logistics Partners, LP (SXL - Analyst Report). Recent results for Sunoco Logistics have been driven by strength in its crude pipeline system and terminals facilities.
Importantly, the partnership has grown its cash distribution for twenty-six consecutive quarters. With its stable fee-based revenue, geographically-diverse assets and strong business fundamentals, Sunoco Logistics offers investors an opportunity to capture income growth through steadily-rising cash distributions and capital appreciation.
Therefore, we are confident of the partnership s total return potential. As such, we rate units of Sunoco Logistics as an attractive investment and maintain its Outperform recommendation. Our $124 price objective reflects a 2012 P/E multiple of 16.5x.
Bear of the Day:
Gentiva Health Services' third-quarter 2011 earnings lagged the Zacks Consensus Estimate, on the back of high interest payments as well as increasing operating expenses, thereby leading to a net loss and a negative operating cash flow. Reimbursement rate cuts and divestitures have led to reduced earnings guidance for 2011.
Ratings downgrade and legal trouble were the other downsides. Overall, the future outlook for Gentiva does not look very promising.
Our six-month target price of $5.00 equates to 3.0x our earnings estimate for 2011. This price target implies an expected total negative return of 7.9% over that period. This is consistent with our Underperform recommendation on the shares.
Latest Posts on the Zacks Analyst Blog:
MasterCard Allies with Intel
Card processing giant MasterCard Inc. (MA - Analyst Report) announced a multi-year strategic alliance with Intel Corporation (INTC - Analyst Report), a multinational semiconductor chip maker, in order to improve the online shopping experience. However, financial and other terms of the collaboration remain undisclosed.
While shopping through internet is pacing up rapidly, MasterCard has decided to collaborate with Intel to enhance a secured payment processing system. Intel’s silicon innovation and chip-based security will enable MasterCard process its payments in a safe and secured manner.
Hence, the companies are mutually operating to increase efficiencies though MasterCard’s PayPass and Intel’s Identification Protection Technology which enables consumers an authentic transaction and hardware-based display protection. This will also result in enhanced security and faster checkout, with the convenience of a simple click or tap.
Enhancing security is important for MasterCard’s card transactions given the competitive pressure against arch rivals, particularly Visa Inc. (V - Analyst Report), along with the market demand in the rapidly growing electronic payment industry. The company has achieved the position to consistently maintain availability of its core global processing systems as well.
Estimate Trend Revision
Over the last 30 days, 14 of 24 analysts covering the stock have raised their estimates for the fourth quarter of 2011, while 7 downward revisions were witnessed. Currently, the Zacks Consensus Estimate for the fourth quarter is operating earnings of $3.96 per share, which would be up by 25.2% from the year-ago quarter.
The higher number of upward estimate revisions for the fourth quarter indicates a positive trend in the performance of the stock in the near term. This reflects MasterCard’s robust growth fundamentals that could be offset by the regulatory snags going ahead.
With respect to earnings surprises, the stock has been steady over the last four quarters, with all four positive surprises. The average remained positive at 9.59%. This implies that MasterCard has surpassed the Zacks Consensus Estimate by 9.59% over that period.
MasterCard benefits from strong secular demand growth, meaningful international exposure, high barriers, excellent pricing power, risk-free balance sheet and impressive operating leverage. Furthermore, the above-average earnings growth, strong competitive position and leverage to an eventual economic recovery will result in a relative valuation premium.
However, we are concerned about MasterCard’s resilience and ability to raise prices, the detrimental effects of the Consumer Protection Act in the U.S. and scope for increasing cash flow. Hence, the cautious outlook over the long term justifies our Neutral recommendation. Conversely, strong fundamentals warrant a Zacks #2 Rank, reflecting a short-term Buy recommendation.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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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