Zacks Equity Research highlights Kraft Foods, Inc. (NYSE: KFT) as the Bull of the Day and Autonation, Inc. (NYSE: AN) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Motorola, Inc. (NYSE: MOT), Banco Bradesco S.A. (NYSE: BBD) and Intersil Corporation (Nasdaq: ISIL).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2676.
Here is a synopsis of all five stocks:
Bull of the Day: Kraft Foods, Inc. (NYSE: KFT)
In February 2007, management announced a new turnaround strategy to revitalize the company's growth. Concurrent with the announcement, the Board approved a significant $5 billion share repurchase program. The new strategy has generated a significant turnaround in organic revenue growth. In mid-February 2008, Berkshire Hathaway disclosed the ownership of a substantial stake in Kraft Foods.
Bear of the Day: Autonation, Inc. (NYSE: AN)
We expect Autonation to be hurt by a continuing weak new car market. The company is disproportionately exposed to Florida and California, which are states that will be hit the most by a slowing car market. As a result, we rate the shares a Sell with a target of $9.00.
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Motorola, Inc. (NYSE: MOT)
Motorola, a leading manufacturer of mobile handsets, network infrastructure and cable products maintained encouraging performance with its Home & Network Mobility and Enterprise Mobility solutions business segments in the most recent reporting period.
The company is in the process of divesting its mobile handset business and recently hired an executive to focus on improving this segment’s proposition value. Motorola implemented effective cost cutting measures, generated positive cash flow from operations, and maintained a respectable net cash position. The management’s outlook for the remainder of the fiscal year is also more favorable.
Banco Bradesco S.A. (NYSE: BBD)
We are continuing our Hold on Banco Bradesco S.A., but cutting our target price to $19. In its second quarter report, Bradesco posted net earnings before nonrecurring items of R$2,002 million, up 11% year-over-year, but below our estimate due to a higher-than-expected effective tax rate.
Despite this, we are maintaining our 2008 EPADS estimate at $1.60 and raising our 2009 estimate to $1.90 from $1.88, due to a change in our FX assumptions from depreciation of the US$ against the Brazilian real. Revenues should benefit from growth in the lending portfolio, though net interest margins are declining and loss provisions should rise. We believe the $0.61 indicated dividend, which provides a 3.3% yield, is safe.
Intersil Corporation (Nasdaq: ISIL)
Intersil is an OEM [original equipment manufacturer] of analog and mixed signal semiconductor ICs. June quarter revenue was in-line with consensus estimates, while the EPS exceeded. Forward guidance is for a 1-3% revenue increase in the next quarter. We are maintaining our Hold rating on the shares.
Shares of Intersil are currently trading at a 14.7x multiple of our current 2008 earnings estimate (P/E). Intersil's product breadth and increasing penetration indicate that it is relatively well positioned in the markets in which it operates. This could be a key factor in the next two years, if the recessionary trends continue. Recent acquisitions have augmented the product portfolio and increased the percentage of consumer and industrial products in the mix, which is a positive for revenue growth and margin expansion.
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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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