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Zacks Bull and Bear of the Day Highlights: Sunoco Logistics Partners, Salesforce.com, Target, Costco Wholesale and JPMorgan Chase

SXL CRM TGT COST JPM

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For Immediate Release

Chicago, IL – February 7, 2012 – Zacks Equity Research highlights Sunoco Logistics Partners ( (SXL - Analyst Report) as the Bull of the Day and Salesforce.com ( (CRM - Analyst Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Target Corporation ( (TGT - Analyst Report), Costco Wholesale Corporation ( (COST - Analyst Report) and JPMorgan Chase & Co. ( (JPM - 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 ( (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-seven 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 $45 price objective reflects a 2012 P/E multiple of 17.9x.

Bear of the Day:

Salesforce.com ( (CRM - Analyst Report) reported decent third quarter 2012 results. The earnings guidance is also decent, but cost increase may offset revenue growth to a certain extent. We are concerned about continuous R&D investments that would rationalize margins to some extent.

We find Chatter a key driver of Salesforce.com's enterprise license agreements. We, however, caution investors about strong competition in CRM application and cloud-computing areas. Google and Microsoft are worthy of special mention, since they have been fighting to win government clients at local, state and federal levels to use their online e-mail and other applications that fit into the cloud-computing space.

Currently, we have an Underperform rating on the stock and set a six-month target price of $108.00. This implies a downside risk of 8.7% from the current level.

Latest Posts on the Zacks Analyst Blog:

Target’s Sales Beat

Recently, Target Corporation ( (TGT - Analyst Report), the operator of general merchandise and food discount stores in the United States, posted better-than-expected sales results for the four-week period ended January 28, 2012, outshining the analysts’ expectation of an increase of 2.1%.

Moreover, this also compared favorably with the prior-year period as Target registered an increase of 4.3% in comparable store sales for January 2012 compared with a rise of 1.7% in the prior-year period. Year-to-date, comparable store sales increased 3% compared with 2.1% growth in the prior-year period.

As per management, January sales were near the high end of the company’s expected growth range of low-to-mid single digit, reflecting increase in average transaction size coupled with a rise in comparable store transactions. The results were driven by strong performance of shoes, health care products and apparels.  

However, in terms of performance, Target lagged behind its peer Costco Wholesale Corporation ( (COST - Analyst Report), which marked an increase of 8% in comparable store sales during the period under review.

Minneapolis, Minnesota-based Target Corporation announced that net retail sales for January increased 5.1% to $4,608 million from $4,383 million reported in the prior-year period. Year-to-date, sales climbed 4.1% to $68,466 million.

Earlier, Target halted its efforts to sell the credit card receivables portfolio momentarily as it failed to find a potential buyer for its card receivables portfolio on appropriate terms. Thus, the company expects the transaction to take place late this year or in early 2013.

Further, Target promised to pay $2.8 billion to Chase Card Services – a subsidiary of JPMorgan Chase & Co. ( (JPM - Analyst Report) – to retire the receivables financing received in 2008.

As per Target, the payout along with a premium, will negatively impact the fourth-quarter 2011 earnings by about 8 cents per share. With lower interest expense in 2012 and 2013, the company expects to recover some or all of the cost of the premium paid.

Last quarter, the Credit Card segment’s revenue tumbled 8.2% to $348 million. However, Target was quick to indicate that the segment profit rose to $143 million in the quarter from $130 million delivered in the prior-year quarter driven by a decline in bad debt expenses.

We believe that sticking on to the business might bring in financial crunch for the company as the requirement of bad debt provisions would be higher, reflecting reduced growth capital for future expansions.

Consequently, Target holds a Zacks #4 Rank, which translates into a short-term ‘Sell’ recommendation. However, considering the fundamentals, we have a long-term ‘Neutral’ rating on the stock.

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.

About the Analyst Blog

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.

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 analyst 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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