The Zacks Analyst Blog Highlights:BP, Transocean, Halliburton, Harvest Natural Resources and MasterCard
CHICAGO, Dec. 30, 2013 /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 the BP plc (NYSE:BP-Free Report), Transocean Ltd (NYSE:RIG-Free Report), Halliburton Company (NYSE:HAL-Free Report), Harvest Natural Resources Inc. (NYSE:HNR-Free Report) and MasterCard Inc. (NYSE:MA-Free Report).
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Here are highlights from Friday's Analyst Blog:
BP Faces Setback in Horizon Payouts
In a twist of fate, British energy giantBP plc (NYSE:BP-Free Report) received adverse ruling from New Orleans District Judge Carl Barbier over settlement payments relating to the 2010 Deepwater Horizon oil spill.
Per the court verdict, the British energy giant has to adhere to the earlier interpretation of the settlement over the spill which tentatively suggests higher payouts for damages. BP – earlier dissatisfied with court-appointed settlement administrator Patrick Juneau – appealed for a revision to the 5th U.S. Circuit Court of Appeals. The company's plea cited concerns that Juneau is compensating even those companies unaffected by the disaster. The 5th U.S. Circuit Court of Appeals ordered Barbier in December to review Juneau's methodology.
As a reminder, on Apr 20, 2010, offshore driller Transocean Ltd's (NYSE:RIG-Free Report) ultra-deepwater Horizon drilling platform, contracted to BP, sank following an explosion while operating in the U.S. GoM off the coast of Louisiana. The incident killed 11 workers and spewed more than 200 million gallons of crude in what was touted as the country's worst oil spill ever. Subsequently, a moratorium was imposed on offshore drilling at water depths of more than 500 feet in the region, which was lifted on Oct 12, 2010.
The breach of Clean Water Act along with other laws led the U.S. government to take legal action against the main defendants in the trial – BP, Transocean and Halliburton Company (NYSE:HAL-Free Report). Several other companies are also involved in the trial.
However, BP already raised its estimate for settlement payments to $9.2 billion in October, from the earlier apprehension of $7.8 billion. Showing strong investor confidence in the festive season, the company's stock surged consecutively for six trading days and hit a new 52-week high of $48.07 on Dec 26, 2013.
London, England-based BP plc is one of the world's largest energy companies, providing its customers with fuel for transportation, energy for heat and light, retail services and petrochemical products. It operates in three segments: Exploration and Production, Refining and Marketing, and Other Businesses and Corporate.
Even though the company remained active in strategic development during the third quarter, it expects flattish production in the upcoming quarter due to planned major turnaround activity and repairs in the high-margin North Sea, planned maintenance in Alaska as well as the continued impact of divestment. For the next quarter, the company expects refining margins to remain under significant pressure due to high gasoline stocks and new competitor capacity addition as well as lower seasonal demand.
BP carries a Zacks Rank #3 (Hold). Better-ranked stocks in the oil and gas sector include Harvest Natural Resources Inc. (NYSE:HNR-Free Report) which holds a Zacks Rank #1 (Strong Buy).
MasterCard Upped to Buy
On Dec 25, Zacks Investment Research upgraded MasterCard Inc. (NYSE:MA-Free Report) to a Zacks Rank #2 (Buy) from a Zacks Rank #3 (Hold).
Why the Upgrade?
MasterCard has been experiencing rising earnings estimates on the back of improved operating leverage, which was evident in its third-quarter 2013 earnings beat. Moreover, the company's improved cash flow and latest capital actions have been impressive.
Additionally, this global electronic payment processor delivered positive earnings surprises in all the last 4 quarters with an average beat of 4.2%. MasterCard also outperformed the one-year S&P 500 Index, which posted an increase of 28.8% against the modest return of 66.5% clocked by the company.
On Oct 31, MasterCard reported third-quarter operating earnings per share of $7.27, which modestly surpassed the Zacks Consensus Estimate of $6.95 and the year-ago quarter number of $6.17.
Although total operating expenses rose 13.6% over the prior-year quarter, top line soared 15.6% based on better pricing, increased number of processed transactions and strong gross dollar value growth. Accordingly, operating income and margins witnessed a boost and also drove the operating cash flow.
MasterCard benefits from strong secular demand growth, meaningful international exposure, high barriers, excellent pricing power and balanced business mix. Moreover, the company's latest capital plan including a 10-for-1 stock split and a 83% hike in regular dividend continue to boost investors' confidence in the stock.
We also remain optimistic of MasterCard's projection to increase its total revenue from the U.S. operations in the mid-to-high single-digit range, while that from international operations to grow in double digits.
Based on MasterCard's capital adequacy and organic growth, the Zacks Consensus Estimate for 2013 moved north by 7.3% to $26.35 per share in the last 60 days. The estimate for 2014 is pegged at $31.10, up 0.9% over the same period. Meanwhile, the Most Accurate estimate for MasterCard's 2013 earnings stands at $26.55 a share, resulting in an Earnings ESP of +0.8%.
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