The Zacks Analyst Blog Highlights: Ford Motor, General Motors, PSA Peugeot Citroen, Humana and CNO Financial Group

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Mar 05, 2012, 09:30 ET

CHICAGO, March 5, 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 Ford Motor Co. (NYSE: F), General Motors Co. (NYSE: GM), PSA Peugeot Citroen (OTC: PEUGY), Humana Inc. (NYSE: HUM) and CNO Financial Group Inc. (NYSE: CNO).

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Here are highlights from Friday's Analyst Blog:

Ford Europe Predicts Heavy Loss

Ford Motor Co. (NYSE: F) revealed that it is likely to lose between $500 million and $600 million in 2012 in the 19 European markets covered by the automaker owing to the ongoing debt crisis in the region. The figure compared with a meager $27 million loss recorded by the company in 2011. In the fourth quarter of last year, the loss amounted to $190 million.

While releasing the fourth quarter results, Ford projected industry volume (including medium and heavy trucks) of 14.0 million units–15.0 million units for full year 2012 in Europe. However, industry-wide sales in the region are expected to reach the lower end of the forecast, according to the Chief Financial Officer of the company, Lewis Booth.

The present Euro zone financial crisis affected the operations of many global automakers, especially Ford and General Motors Co. (NYSE: GM). Both automakers have significant exposure to the market.

The car dealers in Europe are trying very hard to entice consumers with steep discounts and other sales promotions, which will put a downward pressure on their margins. The West European car market is expected to decline to 11 million units in 2012.

A few months back, GM's European arm, Opel, revealed that it expects to report an operating loss of €1 billion ($1.3 billion) due to fewer than anticipated car sales. The unit expects to sell 1.4 million vehicles in 2012, which are about 100,000 units less than the earlier projected sales.

In order to reverse the 12 years of losses in Europe (totaling more than $12 billion), particularly from the Opel brand, GM has recently formed a global allowance with PSA Peugeot Citroen (OTC: PEUGY). The alliance will help both the automakers reduce at least $2 billion in costs.

Ford, a Zacks #3 Rank (Hold) stock, posted a 34% fall in profit to $797 million or 20 cents per share (before special items) in the fourth quarter of 2011 from $1.20 billion or 30 cents per share (before special items) in the same quarter of 2010. With this, the automaker has missed the Zacks Consensus Estimate by 7 cents per share. Total revenue during the quarter grew 6.5% to $34.6 billion. It was higher than the Zacks Consensus Estimate of $31.8 billion.

For full year 2011, Ford reported a 19% decline in profit to $6.12 billion or $1.51 per share (before special items) from $7.58 billion or $1.91 per share in 2010. However, the company's profit failed to meet the Zacks Consensus Estimate of $1.84 per share. Revenues in the year increased 13% to $136.3 billion. It was higher than the Zacks Consensus Estimate of $128.2 billion.

Humana Downgraded to Neutral

We have downgraded our recommendation on Humana Inc. (NYSE: HUM) to 'Neutral' based on the company's high operating expenses and increased dependence on Medicare Advantage earnings. The company also faces ample pricing and competitive risks.

Humana's fourth-quarter operating earnings came in at $1.12 per share, lagging the Zacks Consensus Estimate of $1.20 and the year-ago earnings of $1.14. The fourth quarter earnings of $294 million was also below the year-ago earnings of $310 million.

Humana has been regularly acquiring companies to expand its business platform. The Concentra acquisition has allowed the company to enter the primary care market on a national scale. Additionally, the acquisitions of AMS and MD Care will expand the company's Medicare coverage. Moreover, the acquisition of Antiva Health, announced in December 2011, is expected to strengthen Humana's clinical management.

Besides, Humana has a strong Medicare business, which is further expanded through collaborations. The Medicare Part D PDP plan launched in collaboration with the Wal-Mart Stores in October 2010 expanded the company's individual Medicare stand-alone PDP membership by 52.1% to 2.54 million at 2011-end, compared with 1.67 million at 2010-end.

Moreover, both the Humana Walmart-PDP and Humana's alliance with CNO Financial Group Inc.'s (NYSE: CNO) subsidiary Bankers Life and Casualty Company to offer Humana Medicare products will enhance the company's membership in prescription coverage plans and mail-order drug business. Humana is already the fifth-largest health insurer on enrollment basis.

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