CHICAGO, June 4, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include CNH Global N.V. (NYSE:CNH), Titan International Inc. (NYSE:TWI), AGCO Corporation (NYSE:AGCO), Kubota Corporation (NYSE:KUB) and China Life Insurance Co. Ltd. (NYSE:LFC).
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Here are highlights from Friday's Analyst Blog:
Merger Proposal for CNH Global
Earlier this week, Fiat Industrial SpA proposed a merger with CNH Global N.V. (NYSE:CNH). The primary intent behind the proposal is to form a single company with a single trading stock.
A letter was sent by Fiat Industrial chairman Sergio Marchionne to the Board of Directors of CNH Global. As per this document, Fiat Industrial wishes to ameliorate the state of affairs by conflating CNH Global with Fiat Industrial to create one unique firm which would reduce many complexities. A formal consent would be required from all shareholders of both the companies in order to complete the transaction.
Fiat Industrial, which currently owns 88% of CNH Global, averred that the merger shall not lead to attrition or hamper the ongoing operations of the company. Rather, this momentous event would give birth to a company worth nearly $13 billion with a listing at the New York Stock Exchange and a secondary listing at The Netherlands. We believe this to be quite a profitable venture as both companies sustain a formidable position in the industries they pertain to and the merger will only unite their strengths and elevate the position even more in the global economy.
However, the presence of ominous rivals in the industry is something CNH Global should guard itself against. Big players in this regard include Titan International Inc. (NYSE:TWI), AGCO Corporation (NYSE:AGCO) and Kubota Corporation (NYSE:KUB).
The current Zacks Consensus Estimates for the second quarter of fiscal 2012 and for fiscal 2012 are $1.52 per share and $4.69 per share, respectively. The company currently retains a Zacks #1 Rank, which translates into a short-term 'Strong Buy' rating. We also have an 'Outperform' recommendation on the company's stock.
China Life Upgraded to Neutral
We are upgrading our recommendation on China Life Insurance Co. Ltd. (NYSE:LFC) to Neutral from Underperform, based on improving investment income, extensive domestic distribution channel, strong balance sheet, substantial cash flow and stable ratings. However, the company inherently faces substantial interest rate and currency risks, which limit the upside.
China Life has the most extensive distribution and service network among all insurance companies operating in China. The company's distribution network of exclusive agents, direct sales representatives, banc assurance outlets, customer service managers and financial advisers is spread throughout the country, making it one of the largest brands with one of the biggest customer base in China.
Moreover, investment income of China life has shown substantial improvement over the past two years. It increased 24% and 26% in 2011 and 2010, respectively, after declining 14% in 2009. Investment income from securities at fair value skyrocketed 285.7% in 2011, due to the combined effect of increased investment in debt securities and higher interest rate.
Investment income from bank deposits also registered a 52.6% and a 51% increase in 2011 and 2010, respectively, after declining 5% in 2009. With the improvement in the economic scenario, investment income is expected to improve further.
China Life's stable capital, investment and financial leverage position allows it to retain the confidence of the rating agencies. The company holds an insurance financial strength (IFS) rating of "A+" from Fitch Ratings and "AA-" long-term local currency counterparty credit and IFS rating from S&P, with a stable outlook for all the ratings.
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