For Immediate Release
Chicago, IL – February 28, 2012 – Zacks Equity Research highlights: Green Mountain Coffee Roasters' (GMCR - Analyst Report) as the Bull of the Day and Willis Group Holdings as the Bear of the Day. In addition, Zacks Equity Research provides analysis on BP Plc (BP - Analyst Report), Transocean Ltd (RIG - Analyst Report) and Halliburton Company (HAL - 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:
We are upgrading Green Mountain Coffee Roasters' (GMCR - Analyst Report) stock from Neutral to Outperform on the back of impressive first quarter 2012 earnings results. First quarter earnings surged year over year by 233%. It also topped the Zacks Consensus Estimate by 66.7%. Strong holiday season coupled with huge success of Keurig Single-Cup Brewing System boosted sales during the quarter.
The company took advantage of the holiday season through effective marketing and aggressive promotions resulting in increasing awareness of the Keurig brand. Moreover, the company is encompassing more and more popular brands in the K cup packs so that the consumers have greater choice.
Green Mountain continues expanding new brand relationships and attracting new consumers. Our six-month target price of $81.00 per share equates to about 30.3x our earnings estimate for 2012. With zero annual cash dividend, the target price implies an expected total return of 19.8% over that period.
Bear of the Day:
Willis Group Holdings reported fourth quarter adjusted earnings per share of $0.46, a penny lower than the Zacks Consensus Estimate and 19.3% lower than the year-ago earnings. The lower numbers resulted from lower commissions and fees and investment income coupled with higher expenses. The top line also lagged expectations and the year-ago result.
Willis Group completed its operational review in 2011 and expects an incremental cost savings of approximately $55 million in 2012, reaching annualized savings of approximately $135 million. However, the weakness in the US economy will remain a headwind and restrict any significant top-line growth in the company.
We retain our Underperform rating on Willis Group. Our six-month target price of $31.00 equates to about 10.3x our earnings estimate for 2012. This target price along with an annual dividend of $1.04 implies an expected negative return of about 8.7% over that period.
Latest Posts on the Zacks Analyst Blog:
BP to Face GoM Trial a Week Later
BP Plc (BP - Analyst Report) and Plaintiffs’ Steering Committee (PSC) reported that the trial to decide on who should reimburse for the 2010 Gulf of Mexico oil spill has been postponed by one week, to Monday, March 5, 2012.
The delay is expected to give BP and PSC more time to discuss and settle matters. PSC embodies a group synchronizing the efforts of around 90 law firms on behalf of a condominium of owners, fishermen, hoteliers, restaurateurs and others damaged by the April 20, 2010 explosion of the Deepwater Horizon drilling rig and the subsequent oil spill.
The oil spill had catastrophic effects killing eleven people and pouring 4.9 million barrels from the mile-deep Macondo oil well. This is by far the worst offshore U.S. oil spill.
BP does not guarantee that the extended time will result in a positive outcome. BP and the committee are trying to reach a fair decision to compensate all the parties that incurred losses as a result of the spill.
However, a settlement between BP and the businesses would reduce the complexity of the litigation and signify a major step toward achieving a global settlement with its plaintiffs, comprising the federal government, Gulf states of Alabama, Louisiana and Mississippi as well as fishermen, hotel operators and restaurateurs. The trial was expected to take almost a year.
The breach of Clean Water Act along with other laws led the U.S. government to take legal action against the main defendants in the trial––BP, Transocean Ltd (RIG - Analyst Report) and Halliburton Company (HAL - Analyst Report). Several other companies are also involved in the trial. The penalty amount may go up to tens of billions of dollar as the Gulf states are seeking compensation for their damages, while BP and its drilling partners are also suing each other.
According to sources, BP is chalking out a $14 billion settlement from a $20 billion fund, which was set apart as Gulf Coast Claims Facility for out-of-the-court settlements. An amount of $6 billion has already been paid out of the fund to the spill victims and the company intends to close this chapter by compensating others related to this accident with the remaining amount at the earliest.
BP holds a Zacks #3 Rank, which translates into a Hold rating for a period of one to three months. For the long term, we maintain a Neutral recommendation 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
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