For Immediate Release
Chicago, IL – May 19, 2010 – Zacks Equity Research highlights Capella (CPLA) as the Bull of the Day and Myriad Genetics Inc. (MYGN) the Bear of the Day. In addition, Zacks Equity Research provides analysis on American International Group Inc. (AIG), Prudential PLC (PUK) and MetLife Inc. (MET).
Full analysis of all these stocks is available at http://at.zacks.com/?id=5506.
Here is a synopsis of all five stocks:
Capella’s (CPLA) strong focus towards working adults and exclusive online education has enabled it to establish a healthy position in the for-profit post-secondary education industry. The company’s sustained effort to expand educational programs helps it to boost enrollments, and in turn, the top-line.
Higher education sees a countercyclical movement during sluggish economic conditions. Furthermore, the company’s debt-free balance sheet and solid cash reserves bode well for future operating performance.
Although stiff competition from other online education providing companies remains a threat, we recommend an Outperform recommendation on the stock, given the company’s strong fundamentals. Our target price is currently $100 per share.
Myriad Genetics Inc.’s (MYGN) third quarter fiscal 2010 earnings of $0.33 per share fell short of the Zacks Consensus Estimate by $0.05. The company had earned $0.38 per share in the year-ago period.
Myriad Genetics spun off its therapeutics business in July 2009 to focus on molecular diagnostics going forward. Although the molecular diagnostics business is performing well, we remain concerned about the overall weakness in the economy. It has affected sales adversely in recent quarters.
The competition confronting Myriad Genetics’ products in the biotechnology and genetics testing field is also a concern. Consequently, we downgrade the stock to Underperform.
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PUK Declares Rights Issue for AIA
In order to partly finance its $35.5 billion deal to purchase the Asian life-insurance business AIA Group from American International Group Inc. (AIG), Prudential PLC (PUK) finally announced the details of its previously announced rights issue to raise $20.9 billion (£14.5 billion).
At an issue price of $1.51 (104 pence) each, PUK will offer its shareholders the right to buy 11 shares for every two existing shares in the company.
Apart from the rights issue, the company intends to use debt financing to raise another $5.4 billion to fund the AIA deal. Basically, this debt will be a hybrid capital, which will help protect the buyer institutions against losses. AIG, the seller of AIA Group, has offered PUK to take part in this hybrid capital offering for up to $1.9 billion.
The launch of the rights issue was expected last week, but got delayed subject to an inquiry by the Financial Services Authority, the UK’s financial regulator. PUK is still facing the challenge of gaining approval from its shareholders. At least 75% of shareholders’ approval is required to proceed with the deal. A shareholders’ meeting is scheduled on June 7, 2010.
As per the original deal announced in early March this year, AIG agreed to sell AIA Group to PUK for about $35.5 billion. This included approximately $25 billion in cash, $8.5 billion in face value of equity and equity-linked securities, and $2.0 billion in face value of preferred stock of PUK, subject to closing adjustments.
The cash proceeds would be used to repay the bailout money to the Federal Reserve Bank of New York, which rescued AIG from collapsing in 2008. AIG also sold its American Life Insurance Co. division to MetLife Inc. (MET) for $15.5 billion.
Following the closure of the deal, PUK will have exposure to an additional 20 million customers in 15 countries. However, if unsuccessful, the company will have to pay a termination fee of $230.6 million to AIG.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
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