Zacks Equity Research highlights TRW Automotive (NYSE: TRW) as the Bull of the Day and National City (NYSE: NCC) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Telefonica S.A. (NYSE: TEF) and C.H. Robinson Worldwide, Inc. (Nasdaq: CHRW). Full analysis of all these stocks is available at http://at.zacks.com/?id=2676.
Here is a synopsis of all four stocks:
Bull of the Day:
Our Bull of the Day recommendation is for TRW Automotive (NYSE: TRW). TRW Automotive has excellent long-term prospects, primarily because of the increasing emphasis being put on safety awareness by the government and consumers. Management is re-evaluating its cost structure and is keen on undertaking restructuring activities. As a result, we rate the stock a Buy with a target price of $45.00.
Bear of the Day:
Our Bear of the Day recommendation is for National City (NYSE: NCC). NCC filed its mid-quarter financial update (through August 31, 2007) on September 17, 2007. The company now expects the after-tax Mortgage Banking loss to be in the higher end of $130 160 million range. During the first two months of 3Q07, credit metrics deteriorated with Non-performing assets up 20% and Net Charge-offs up 36% from the June 2007 level. Based on the updated financial guidance, we have lowered our FY07 and FY08 estimates to $1.88 per share and $2.46 per share from $2.35 and $2.82 per share respectively. Our new six-month target price of $23 per share implies a negative return of about 9% during the period. We are thus downgrading our recommendation on the shares of NCC to Sell from Hold.
Analyst Blog:
We maintain our Hold rating for Telefonica S.A. (NYSE: TEF), the largest telecommunications company in Spain and Latin America. Quarterly results on a sequential basis continue to exceed our expectations. Both the top-line and bottom line improved following recent acquisitions by the company. However, the competitive environment remains challenging and we are cautious about the company’s aggressive acquisition strategy, along with the integration process following such initiatives. Also, the stock is trading near the high, reflecting growth that may be a stretch. Furthermore, there is the need to consider the currency exchange rate, which is associated with the Euro vs. U.S. as the dollar may be reaching its lower inflection point.
We are maintaining our Hold on C.H. Robinson Worldwide, Inc. (Nasdaq: CHRW), but increasing our target price to $56. CHRW is expected to report third quarter results on October 23, 2007. We are continuing our diluted EPS estimates at $1.85 for 2007 and at $2.15 for 2008. The slowing domestic economy could pressure both 2007 pricing and volume, with comparisons in the second half likely to be more difficult. CHRW reported 2007 second quarter EPS of $0.47, 24% above 2006’s results and meeting consensus, but $0.03 higher than our $0.44 estimate, primarily reflecting improved truck margins due to excess capacity in this market. Truck volumes were also strong, rising 7-8% on increased market share. We believe CHRW’s dividend is safe.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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.
About the Analyst Blog
Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.
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Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
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