For Immediate Release
Chicago, IL – January 26, 2010 – Zacks Equity Research highlights Cree, Inc. (CREE) as the Bull of the Day and AES Corporation (AES) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Dean Foods (DF), ConAgra (CAG) and Kraft Foods (KFT).
Full analysis of all these stocks is available at http://at.zacks.com/?id=5506
Here is a synopsis of all five stocks:
Cree, Inc. (CREE) is one of the leading producers of SiC and GaN-based LEDs. September quarter revenue and earnings exceeded consensus estimates.
The global movement to energy efficient lighting is prompting lighting companies and consumers to look at other options. Therefore, lighting will be the strongest end market for Cree, likely followed by video displays and notebooks. Yield improvements, higher capacity utilization, larger wafers and offshore production will increasingly offset new product ramp up costs.
The LED market is hot in our opinion, and the LLF acquisition opens up new opportunity. We are reiterating our BUY rating on CREE shares.
Our Underperform recommendation on AES Corporation (AES) takes into account the significant international presence of its fossil fuel power plants in several emerging markets, thereby exposing it to both foreign currency and political risk.
The company’s predominantly long-term contracts preempt any rate-base growth in the near term for its regulated utilities. Also, with lower electricity demand due to a tepid global economy, the fate of spot wholesale markets is not encouraging.
As a result, we expect shares of AES Corporation to Underperform the broader equity markets in general and the utilities and merchant generators in particular.
Latest Posts on the Zacks Analyst Blog:
Dean Foods Downgraded to Neutral
We downgrade our recommendation for Dean Foods (DF) to Neutral, meaning the stock will perform in line with the broader market.
Earnings for the last quarter beat the Zacks Consensus Estimate by a penny, supported by the company’s cost management initiatives. However, consolidated sales suffered due to the pass-on of lower dairy commodity costs to consumers in the form of lower prices and reduced sales volume in the WhiteWave-Morningstar segment.
Dean Foods has taken definitive actions to improve shareholder and consumer value and extend its low-cost position while focusing on boosting branded product business. The company continues to generate healthy cash flow from operations allowing investments in product innovations, acquisitions and brand development.
In the mature yet consolidating dairy industry, management is expanding through strategic acquisitions and streamlining costs by closing down facilities. The company’s acquisition of Alpro (European leader in branded soy-based beverage and food products) is driving sales growth for WhiteWave-Morningstar.
However, Dean Foods continues to operate with a highly leveraged balance sheet and faces intense competition and volatile commodity and fuel prices, which warrants a cautious approach toward the stock. While the company recently raised earnings guidance for fiscal 2009, the management is concerned about the continued competitive activity in fluid milk operations and is cautious about diminished commodity favorability in the foreseeable future.
The dairy industry is mature and growing slowly with a slow-to-flat growth rate. In recent years, the retail grocery industry has experienced significant consolidation and, as a result, competition has intensified among dairy product suppliers. Dean Foods experiences stiff competition, especially at the processor level in all major product lines and geographic markets. The company’s major competitors are Nestlé, ConAgra (CAG) and Kraft Foods (KFT).
While Dean Foods remain focused on effective pass-through of changes in dairy input costs, we feel near-term visibility of rising raw milk prices may drag earnings and margins in the upcoming reporting periods. Dairy prices are expected to show an upward trend through 2010.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
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