Zacks Bull and Bear of the Day Highlights: SM Energy, ICICI Bank, The Coca-Cola Company, PepsiCo and Unilever NV
CHICAGO, Jan. 10, 2012 /PRNewswire/ — Zacks Equity Research highlights: SM Energy Company (NYSE: SM) as the Bull of the Day and ICICI Bank Ltd. (NYSE: IBN) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on The Coca-Cola Company (NYSE: KO), PepsiCo Inc. (NYSE: PEP) and Unilever NV (NYSE: UN).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
We believe that SM Energy Company’s (NYSE: SM) emerging core portfolio is a catalyst for visible organic growth over the next several years. The company’s earnings in the third quarter more than doubled from the prior-year, buoyed by higher operating income, increased production and recognition of a gain on divestiture activity.
The company’s Eagle Ford and Bakken assets are key drivers of liquids growth. SM Energy has significant leasehold positions in the leading U.S. shale plays, including the Niobrara, Haynesville and Granite Wash, which we believe will provide the company with multiyear profitable drilling inventory.
Considering these factors, we are maintaining our recommendation at Outperform. Our $94 price objective reflects a multiple of 13.3x the trailing the 12-month cash flow.
We are downgrading our recommendation on ICICI Bank Ltd. (NYSE: IBN) to Underperform primarily on rising operating expenses. Net earnings for the second quarter of fiscal 2012 increased, but a substantial increase in operating expenses was the headwind.
We anticipate continued synergies from the company’s increased dependence on domestic loans, an almost stable funding base and market leadership in the insurance business. However, we are concerned about ICICI’s highly competitive operating environment and below-average credit quality.
Our six-month target price of $26.00 per ADS equates to about 12.3x our earnings estimate for fiscal 2012. This target price implies an expected negative total return of 8.6% over that period. This is consistent with our Underperform recommendation on the ADSs.
Latest Posts on the Zacks Analyst Blog:
Coke & Nestle End Tea JV in U.S.
The Coca-Cola Company (NYSE: KO) has terminated its partnership with Nestle SA to sell Nestea in U.S. and Asia and has instead chosen to focus on the sale of ready-to-drink tea in Europe and Canada. Coca-Cola will also enter into a license agreement with Nestle for the Nestea brand in Taiwan and Hong Kong.
Apart from these, the dissolution of the Coca-Cola and Nestle’s joint venture named Beverage Partners Worldwide (BPW) is expected in most of the regions where it operates by the end of 2012, subject to any regulatory approval.
BPW is a 50-50 joint venture which was started in 2001; and the partnership concentrated chiefly on the ready-to-drink tea categories. It operated in more than 60 countries and was formed after these two companies worked together for 10 years in a joint venture called Coca-Cola and Nestle Refreshments.
According to the companies, Nestea has been performing well in the regions of Europe and Canada and has also boosted the presence of the joint venture. However, in U.S., Nestea struggled hard to compete with its rival brand Lipton, which is in the joint venture with PepsiCo Inc. (NYSE: PEP) and Unilever NV (NYSE: UN).
Although the ready-to-drink beverage market is still rapidly developing in U.S, Nestea is left behind in getting its share. According to the Beverage Digest data of 2010, Lipton was able to sell about 247m cases of Lipton in the US, while Nestea could sell just 74m cases.
As Coca-Cola ended its partnership with Nestle in U.S. and Asia, it has decided to launch a new tea brand under the label Fuze in U.S.and will also continue to focus on its Honest Tea and GoldPeak brands.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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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.
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