Zacks Bull and Bear of the Day Highlights: Humana, RC2, Ford Motor, Lear and Toyota Motors
 |
CHICAGO--March 4, 2011: Zacks Equity Research highlights: Humana, Inc. as the Bull of the Day and RC2 Corp. as the Bear of the Day. In addition, Zacks Equity Research provides analysis Ford Motor Co. , Lear Corp and Toyota Motors .
Here is a synopsis of all five stocks:
Bull of the Day:
We are upgrading our recommendation on Humana, Inc. from Neutral to Outperform owing to higher Medicare Advantage membership on better-than-expected sales at the end of 2010. This also led to increase in Humana's 2011 outlook, coupled with the stand-alone Prescription Drug Plan (PDP) offerings during the recently completed 2011 open enrollment period.
Humana posted impressive fourth quarter earnings, surpassing both the Zacks Consensus Estimate and the prior-year earnings, on the back of improved performance in the company's operations, lower commercial medical cost trends and surplus cash flows generation in 2010, which also resulted in share buybacks.
Further, the launch of Humana Walmart-PDP enhanced the company's membership in prescription coverage plans and mail-order drug business. Our six-month target price of $76.00 equates to 12.1x our earnings estimate for 2011. This price target implies an expected total return of 20.0% over that period.
Bear of the Day:
RC2 Corp.'s fourth quarter 2010 earnings missed the Zacks Consensus Estimate due to lower gross margin. We remain cautious on the stock due to increasing input costs pressure and currency fluctuation risk.
Moreover, competition from private label toys and video game industry is increasing. Additionally, ordering from retailers remains conservative, thus negatively impacting the sales of the company. Hence, we are downgrading the stock from Neutral to Underperform.
Our six-month target price of $19.00 equates with 9.9x our earnings estimate for 2011. With no dividend to supplement, this price target implies an expected negative return of 10.3% over that period, which is consistent with our Underperform recommendation.
Latest Posts on the Zacks Analyst Blog:
Ford Adds Third Recall
Ford Motor Co. announced its third round of vehicle safety recalls since early last month. The automaker will recall 35,000 units of pickup trucks and crossover in two sets in the U.S. and Canada in order to fix fuel leaks and electrical shorts in the vehicles that could lead to fires.
The first set of recalls involves 25,000 units of 2010 Ranger pickup trucks for possible fuel line leaks in the engine compartment. They were manufactured between October 2009 and May 2010.
Meanwhile, the second set of recalls includes 9,100 units of Ford Edge and Lincoln MKX mid-size crossovers, and Ford F150, F250, F350, F450 and F550 trucks. They were produced between October 25, 2010 and November 20, 2010.
Ford stated it is unaware of any fires or injuries due to the possible defects in the vehicles. Owners will be requested to bring their vehicles in mid-March to dealers for repairs.
In early February, Ford recalled more than 1,600 units of its newly launched Explorer sports utility vehicle due to a safety problem with the second row of seats. The vehicles were manufactured between July and December 2010. The company revealed that the seats were built by Lear Corp . The seats had manual reclining mechanisms that did not meet federal safety standards.
Again, in the last week of February, Ford recalled 144,000 units of its best selling pickup truck, F-150, in the U.S. and Canada. The announcement followed a request made by the National Highway Traffic Safety Administration (NHTSA) to fix a glitch with the front air bags.
Automotive safety recalls were brought into focus by media after Toyota Motors' announcement of the largest-ever global recall of 14 million vehicles since November 2009.
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.
SOURCE Zacks Investment Research, Inc.
