For Immediate Release
Chicago, IL – December 2, 2009 – Zacks Equity Research highlights SINA (SINA) as the Bull of the Day and Valero (VLO) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Boeing (BA), Paccar (PCAR) and Emerson Electric (EMR).
Full analysis of all these stocks is available at http://at.zacks.com/?id=5506
Here is a synopsis of all five stocks:
SINA’s (SINA) online advertising business has continued to do well and has built a competitive edge. The company expects strong growth in advertising revenue and resurgence in margins in 2010.
Third-quarter results exceeded the company’s own guidance and beat Zacks Consensus Estimates. Moreover, SINA is witnessing signs of strong recovery in the advertising market of China, which is reflected in the company’s higher-than-expected guidance. We expect SINA to benefit from the growing trends in the wireless business and expect a huge improvement in its advertising business, as advertising spending recovers.
However the failed acquisition of Focus Media does not bode well for the company. SINA has a strong net cash position. We see further upside to the stock and thus raise our earnings estimates for 2010. We are upgrading SINA to Outperform from Neutral but maintain our six-month price target of $50.00.
We reiterate our Underperform rating for Valero (VLO) shares as a combination of weak demand, excess production capacity and narrowing crude quality spreads are expected to weigh on near-term margins.
In addition to the near-term margin issues, commissioning of new refineries and extension projects indicate future struggle as global demand for almost all fuel products (except gasoline) is trending lower.
The medium- to long-term outlook also remains cloudy with unfavorable regulatory changes (growing biofuel mandates) weighing on demand growth and limiting margin gains. Being the largest independent refiner, Valero remains particularly exposed to this unfavorable macro backdrop.
Latest Posts on the Zacks Analyst Blog:
Manufacturing Index Slips 2 Points
In a positive sign looking forward, the strongest sub-component — as well as the one showing the most improvement — was new orders, with a reading of 60.3, up 1.8 points from October. A total of 13 industries reported improvement in new orders, while only four recorded declines. The production sub-index also had a strong absolute reading of 59.9, but it showed a 3.4-point decline from last month. Eleven industries reported increasing production, and only three reported lower production.
While still above 50, the employment component is just barely, at 50.8 — down 2.3 points from October. The vast majority of respondents reported no change in employment levels. In the November survey, 17% of respondents reported higher payrolls and 18% reported lower. In October, 20 had reported expansion and 16% reported contraction. Given the current unemployment rate of 10.2% and with manufacturing being particularly hard-hit, the decline in this sub-index is particularly disheartening.
Overall, it appears that the industries that are showing the most distress from this report are wood products and furniture. Transportation equipment was also repeatedly listed on the weak side. This is particularly true of the key new orders and production components. This indicates that firms like Boeing (BA) and Paccar (PCAR) still face weak business conditions.
The electrical equipment industry, on the other hand, was consistently listed on the positive side in the report. This might be a good omen for firms like Emerson Electric (EMR).
Overall, this report is more evidence of a slow-but-steady recovery for the economy.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
About the Bull and Bear of the Day
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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