For Immediate Release
Chicago, IL – November 17, 2011 – Zacks Equity Research highlights Perrigo Company (PRGO - Analyst Report) as the Bull of the Day and Leggett & Platt, Inc.'s (LEG - Analyst Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Citigroup Inc. (C - Analyst Report), Bank of America Corp. (BAC - Analyst Report) and Bank of New York Mellon Corp (BK - 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:
Perrigo Company (PRGO - Analyst Report) reported earnings per share of $1.10 for the first quarter of fiscal 2012, beating the Zacks Consensus Estimate of $1.03 and the year-earlier earnings of $0.87. Perrigo upped fiscal 2012 earnings per share outlook from $4.50-$4.65 to $4.65-$4.80 due to a strong pipeline and production efficiency gains. Revenue guidance was also increased.
We too increased our revenue and earnings estimates for fiscal 2012. We believe that Perrigo's strong position in the brand OTC pharmaceutical market and growing generics and API businesses combined with its strong and impressive pipeline can drive growth in fiscal 2012 and beyond.
We have thus upgraded our rating from Neutral to Outperform to reflect the company's better growth outlook for fiscal 2012. Over the last five years, Perrigo's shares have traded in a range of 11.8x to 29.3x trailing 12-month earnings. Our target price of $113 is based on 23.8 x our fiscal 2012 EPS estimate of $4.74.
Bear of the Day:
Leggett & Platt, Inc.'s (LEG - Analyst Report) increased operating expenses coupled with higher cost inflation battered the third-quarter 2011 results. The company reported a flat year-over-year earnings of $0.31 per share, missing the Zacks Consensus Estimate of $0.36. Consequently, anticipating lower market growth expectation, the company has lowered its sales guidance for fiscal 2011 from the range of $3.5 $3.7 billion to $3.6 billion.
On the back of promising sales, Leggett also lowered and narrowed its forecasted 2011 EPS in the range of $1.15-$1.20 per share from $1.25-$1.40 per share. Moreover, intense competition from global and regional players, volatility in raw material prices and exposure to adverse foreign currency translations may undermine the company's growth prospects and profitability.
Our long-term Underperform recommendation on the stock indicates that it would perform below the broader market. Our target price of $20.00, 16.8x 2011 EPS, reflects this view.
Latest Posts on the Zacks Analyst Blog:
Citigroup Plans Layoff to Cut Costs
Citigroup Inc. (C - Analyst Report) is mulling over retrenching 3,000 workers as part of its cost containment measures, the Wall Street Journal reported following communication with people familiar with the plans. Among total layoffs, Citi plans to slash 900 jobs from its securities and banking division.
The move came on the back of turmoil in equity and debt markets. The ongoing economic and market instability has compounded the quandary.
Moreover, other cost curtailment measures include shedding of assets at Citi Holdings. In the third quarter of 2011, Citi Holdings revenues decreased 27.0% from the prior-year quarter to $2.8 billion.
However, Citi has been relentlessly trying to realign its balance sheet in accordance with the regulatory changes post meltdown to remain afloat. After a careful review of the business, which took into account current trends in credit and technology, management has decided to make strategic sense to move retail partner cards and a vast majority of its assets from Citi Holdings to Citicorp. The transition will be completed by the end of 2011.
Besides, earlier this month, the company announced an immediate reshuffling of responsibilities of the top managers in the emerging markets. Manuel Medina-Mora has been bestowed with added responsibility for global consumer and commercial banking as Mike Corbat became the sole CEO for Europe, the Middle East and Africa.
The plan suggests Citi’s strategy of generating more revenue in the emerging markets, such as Asia and Latin America in the midst of slow U.S. economic growth coupled with the divesting redundant assets in the Citi Holdings unit.
The company is significantly optimistic about the success of its reshuffling of management. We, however, remain hopeful for Citi to overcome all its concerns with the management reshuffling at least in the near-to-medium term.
Nevertheless, Citi is making every effort to save its own skin. It is initiating several actions to remain afloat. The job cut initiative explains Citi’s attempt to improve profitability amid revenue headwinds due to a weak economy and stricter capital requirements by regulators.
Many large Wall Street banks have started reducing their workforces to cut costs following the slowdown in economic and market activity. Further, some large Wall Street banks are laying off employees due to weak trading volumes and stringent regulations on some parts of their business.
Citi is not the only institution doing this dirty job of rendering so many jobless. Among other U.S. banks, in September, Bank of America Corp. (BAC - Analyst Report) has plans to retrench 40,000 workers under the first phase of a proposed restructuring program for recovering its financial position. Moreover, in August, Bank of New York Mellon Corp (BK - Analyst Report) stated that it will slash about 1,500 jobs, which represents about 3% of its total workforce.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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