For Immediate Release
Chicago, IL – September 29, 2010 – Zacks Equity Research highlights:CIGNA (CI) as the Bull of the Day and Kirkland’s (KIRK) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Walgreen (WAG, Goldman Sachs Group Inc. (GS) and Morgan Stanley (MS).
Full analysis of all these stocks is available at http://at.zacks.com/?id=5506.
Here is a synopsis of all five stocks:
We are upgrading our recommendation on the shares of CIGNA (CI) to Buy as we believe the recent acquisition of Vanberda international will boost the company’s thriving international operations, which is key to the growth of the company.
Moreover, CIGNA has lower exposure to reform risks than other insurers, and thus has an edge with respect to the Health Care Reform Act. A strong balance sheet and adequate liquidity will lead to continued share buybacks, contributing to the bottom line.
CIGNA has benefited from an effective execution of growth strategy and strong earnings from diversified businesses, and is poised to attain its full year 2010 financial goals. Our six-month target price of $36.00 equates to about 8.2x our earnings estimate for 2010. We view $0.04 per common share annual dividend as secure, implying an expected return of about 21% over that period.
Kirkland’s (KIRK) reported meager second-quarter 2010 results with earnings of $0.16, which was below the Zacks Consensus Estimate by $0.02. The company’s susceptibility to the global economic downturn coupled with stiff competition, severely undermines the company’s future growth prospects and profitability.
The global economic environment has been challenging for the past fifteen months. Declining real estate value, reduced lending by banks, solvency concerns of major financial institutions, increase in unemployment levels and significant volatility in the global financial markets have negatively impacted the level of consumer spending for discretionary items.
The company’s sales are also highly dependent on its ability to anticipate and respond to changing merchandise trends and consumer demands in a timely manner. Any slackness in doing so would spoil the company’s image with its customers thereby reducing customer traffic which in turn would finally affect revenues and margins.
Latest Posts on the Zacks Analyst Blog:
Walgreen Beats Estimates
Walgreen (WAG reported an EPS of 49 cents in the fourth quarter of fiscal 2010, surpassing both the Zacks Consensus Estimate and the year-ago quarter by 5 cents.
However, results for the quarter included a penny towards restructuring cost and 4 cents for the Duane Reade acquisition. The fourth quarter in fiscal 2009 included 3 cents per share towards restructuring costs. For fiscal 2010, the company reported an EPS of $2.12, meeting the Zacks Consensus Estimate but ahead of $2.02 of fiscal 2009.
Net sales for the quarter increased 7.4% year over year to $16.9 billion, marginally beating the Zacks Consensus Estimate of $16.8 billion. While comparable store sales (those open for more than a year) increased 1.5% during the quarter, sales of front-end comparable drugstores increased 1.2%. For the full year, net sales increased 6.5% to reach $67.42 billion, marginally beating the Zacks Consensus Estimate of $67.38 billion.
Following encouraging results, shares were higher by more than 11% during Tuesday trading.
Goldman Funds Get Endesa Assets
Two infrastructure funds managed by Goldman Sachs Group Inc. (GS) have agreed to buy 80% of the Madrid-based Endesa’s natural gas distribution assets for €800 million ($1.1 billion).
The assets include a distribution network covering a stretch of 3,800 kilometers, a transport network of 600 kilometers and 355,000 access points. It covers seven of the seventeen autonomous regions of Spain.
The deal is a strategic fit for both the parties. The Spanish power utility Endesa SA, which is 92% owned by Italy’s Enel SpA, would be able to reduce its debt position with the proceeds. The deal would benefit Endesa’s pre-tax profits by €450 million. Enel became Europe’s most debt ridden utility following the acquisition of Endesa.
On the other hand, investments in infrastructural assets are becoming increasingly attractive to private equity firms due to the strong and somewhat stable and predictable return from them. Last year, part of gas distribution tubes and transport pipelines from Gas Natural, the Spanish energy group, were sold to Morgan Stanley Infrastructure fund of Morgan Stanley (MS) and Galp Energia of Portugal.
Goldman’s unit Goldman Sachs Infrastructure Partners outbid the competitive infrastructure funds of AXA Private Equity and the Macquarie group of Australia to win the deal. This unit of Goldman has around $10 billion of assets under management, which have been invested in established and developed infrastructure assets in order to generate a return of around 10% to 15% for its several pension fund investors.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
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CIGNA CORP (CI): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
KIRKLANDS INC (KIRK): Free Stock Analysis Report
MORGAN STANLEY (MS): Free Stock Analysis Report
WALGREEN CO (WAG): Free Stock Analysis Report
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