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For Immediate Release
Chicago, IL – July 20, 2012 – Zacks Equity Research highlights Raytheon Company ( RTN - Analyst Report ) as the Bull of the Day and SM Energy Company ( SM - Analyst Report ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Computer Sciences Corporation ( CSC - Analyst Report ) , Accenture plc. ( ACN - Snapshot Report ) and Hewlett-Packard Company ( HPQ - 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:
We have upgraded our recommendation on Raytheon Company ( RTN - Analyst Report ) to Outperform from Neutral, as we believe the company will fare better among the large-cap defense players in the face of downward defense budget trends and the incoming effect of sequestration. Our bullishness comes from its nonplatform-centric focus, rising international sales and substantial presence in the domestic classified market.
Looking forward, Raytheon enjoys strong order bookings and order backlog, an improving balance sheet, growing cash flow, and steady operational improvements. Future growth will be driven by its focus in the areas of Intelligence, Surveillance and Reconnaissance; air & missile defense systems; border security; air traffic management; training & homeland security; and cyber security.
We feel the discounted valuation of the company is unjustified, owing to its non-platform-centric focus, rising international sales, substantial presence in the classified market, strong order bookings and order backlog, strong cash flow generation and its focus on shareholder value. Our $67.00 target price is based on P/E multiple of 12.9x 2012 EPS.
We are downgrading our recommendation for SM Energy Company ( SM - Analyst Report ) to Underperform from Neutral. The company's holding in the non-core region of the Williston Basin will lag the output of its peers with acreage in the core region of the Basin.
Moreover, midstream disruptions in the Bakken and the Permian hindered output in April 2012, and are likely to put pressure on the company's output guidance. Other risks that could potentially impact the company's operations include a lack of service rig availability, dry holes, mechanical failures and adverse weather conditions.
Hence, we have downgraded our recommendation to Underperform from Neutral. Our $43 price objective reflects a multiple of 3.8x the trailing the 12-month cash flow.
Latest Posts on the Zacks Analyst Blog:
CSC Offers Insurance Solution
Computer Sciences Corporation ( CSC - Analyst Report ) recently came up with a new product targeted at insurance companies. The new insurance business process from CSC helps speed up the payments of death benefits and is useful to locate beneficiaries for death claims.
This solution from CSC identifies the potential claims by searching the Social Security Death Master File (DMF) and other such databases. The validation process also includes the insured’s identity and policy coverage, executes the settlement of claims and searches for beneficiaries and claim payment recommendations and also helps in generating all search details.
This insurance business process offers tools required at the professional level, enhancing the quality of service in a cost-effective manner. Moreover, CSC’s team of claim examiners has the ability to execute the entire cycle of search and settlement of claims, or any portion thereof, depending on the insurer’s needs, and evaluated on the basis of the transaction.
Although CSC is taking necessary steps to come up with innovative solutions to improve its business volume and enhance its customer base, finding the right customers for the solution becomes difficult, as the insurance sector is in the doldrums.
While restructuring, cost-saving and new contract wins are some of the ways in which the company is trying to increase its business volume, the delay in new order renewals from the government vertical and deterioration in European economic activity are some of the factors that concern us.
Intense competition in the IT and cloud-computing space from both small and big players such as Accenture plc. ( ACN - Snapshot Report ) and Hewlett-Packard Company ( HPQ - Analyst Report ) , CSC’s large European exposure, strained federal budgets and delayed approval of government contracts are other factors weighing on the stock in the short term.
Currently, CSC holds a Zacks #5 Rank (implying a short-term Strong-Sell rating).
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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