For Immediate Release
Chicago, IL – January 20, 2010 – Zacks Equity Research highlights NET Servicos (NETC) as the Bull of the Day and CVS Caremark (CVS) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Citigroup (C), Kraft Foods (KFT) and Cadbury PLC (CBY).
Full analysis of all these stocks is available at http://at.zacks.com/?id=5506
Here is a synopsis of all five stocks:
We upgrade our recommendation for NET Servicos (NETC) to Outperform. Since 2005, the company has been posting impressive operating results, including continued growth in its subscriber base, increasing average revenue per user, strong growth in its broadband and voice service divisions, better cash flow generation and continued growth in revenues.
NET Servicos is pursuing a conservative cash management policy to ensure implementation of its strategy of sustained growth. Management’s view is to sustain the organic growth of the company irrespective of the capital market condition.
We also remain optimistic about the acquisition of ESC 90 Telecomunicacoes by the company. Our target of $13.50 reflects an expected 6% gain in share price.
CVS Caremark’s (CVS) third quarter earnings came in at $0.65, a cent above the Zacks Consensus Estimate and higher than $0.60 reported in the year-ago period. Revenues increased 18.2% year over year to $24.6 billion driven by robust growth of both the Pharmacy Services and Retail Pharmacy segments.
The company is maintaining its momentum and recently opened its 7000th store. However, we remain deeply concerned with the loss of $4.8 billion of contracts for 2010. Additionally, the company is being investigated by the Federal Trade Commission for some of its business practices.
We believe all these issues will have a negative impact on the stock price. As a result, we downgrade the stock to Underperform with a target price of $30.
Latest Posts on the Zacks Analyst Blog:
Citi Silver Lining: Better Than Last Year
Citigroup (C) matched the Zacks Consensus Estimate for its fiscal fourth quarter reported this morning at a loss of 33 cents per share. The company suffered an incredibly bad fourth quarter of 2008, so year-over-year comparables are very favorable. So favorable, in fact, they are devoid of much meaning. A year ago, Citigroup lost $3.40 per share in the quarter. Revenues dropped 4.2% from the year-earlier level to $5.41 billion.
The quarterly loss would have been a much narrower 6 cents per share if we exclude the $6.2 billion in TARP repayments. The company recently paid back $20 billion that it owed the government. However, the government still owns more than a quarter of the bank’s equity. Another positive data point in the report was the decline in the company’s loan-loss provisions, both sequentially as well as year over year.
Analysts had been trending downward in earnings estimates overall for the past month. Whereas 30 days ago the Zacks Consensus Estimate was a loss of 29 cents per share, the loss of 33 cents hit Citigroup’s numbers right on the head.
Kraft: Cadbury Accepts Final Offer
Kraft Foods (KFT) announced that Cadbury PLC (CBY) has accepted its final offer, which values Cadbury at £11.7 billion ($19 billion) or 850 pence per share (approximately $13.86 per share).
As per the offer, Cadbury shareholders will receive 500 pence (about $8.15) in cash and 0.1874 New Kraft Foods shares for each share of the UK confectioner. In addition, Cadbury shareholders will receive 10 pence per Cadbury share in the form of a special dividend.
Kraft had first proposed a takeover of Cadbury in September 2009 for £10.2 billion (approx. $16.5 billion). However, Cadbury had rejected the offer. Kraft had later offered an increased proportion of cash in its tender offer. The company sold its North American pizza business to Nestle for $3.7 billion in cash and said that it would use the proceeds to increase the cash proportion. But Cadbury’s Board again rejected the offer stating that the confectioner’s better-than-expected performance in the fourth quarter makes Kraft’s offer even more unattractive.
At last, Kraft has now succeeded in convincing Cadbury with its new offer. Cadbury’s Board has unanimously recommended its shareholders to accept the terms of the offer. Kraft has indicated that the final offer is worth 13.0 times Cadbury’s underlying 2009 EBITDA.
Following the combination with Cadbury, Kraft expects to revise its long-term growth targets to 5%+ for revenue and 9%-11% for EPS, from its previously announced 4%+ for revenue and 7%-9% for earnings. The company believes that the acquisition will be accretive to its 2011 earnings by 5 cents per share. It expects to realize annual cost savings of approximately $675 million by the end of third year.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
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