Zacks Bull and Bear of the Day Highlights: Berkshire Hathaway, Universal Technical Institute, Procter and Gamble, Unilever and Edwards Lifesciences
CHICAGO, March 29, 2011 /PRNewswire/ -- Zacks Equity Research highlights: Berkshire Hathaway (NYSE: BRK.B) as the Bull of the Day and Universal Technical Institute (NYSE: UTI) as the Bear of the Day. In addition, Zacks Equity Research provides analysis Procter and Gamble Co (NYSE: PG), Unilever Plc. (NYSE: UL) and Edwards Lifesciences (NYSE: EW).
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Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Berkshire Hathaway's (NYSE: BRK.B) fourth quarter earnings were up year over year, driven by an increase in revenue from the company's economy-sensitive business - Utilities & Energy and Manufacturing, Service & Retailing. Also, the recently completed acquisition of the railroad company Burlington Northern Santa Fe (BNSF) contributed significantly to the earnings.
We believe the company is poised to grow its top line as growing rail demand for freight catches up with the stabilizing economy. Higher revenues are expected from its Utilities & Energy and Manufacturing, Service & Retail businesses as consumers increase spending. Moreover, a solid balance sheet, adequate liquidity and continuing trend of growing book value were among the positives.
Our six-month target price of $102.00 per share equates to about 18.2X our earnings estimate for 2011. This target price implies an expected total return of 20% over that period. This is consistent with our Outperform recommendation on the shares.
Universal Technical Institute's (NYSE: UTI) average enrollment rose 8.5% but dropped 690 basis points sequentially. The rate of fall in the new enrollments accelerated to 13% during the most recent quarter, following a decline of 5% in fourth-quarter 2010.
Management warned that enrollment of new students for fiscal 2011 will be below the prior-year level due to regulations proposed by the Department of Education, and will consequently result in a single-digit revenue growth.
Hence, we maintain our Underperform rating on the stock. We have a long-term Underperform recommendation on the stock. Our target price of $16.00, 12.5X 2011 EPS, reflects this view.
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China Pays More to Stay Clean
Procter and Gamble Co (NYSE: PG) along with Unilever Plc. (NYSE: UL) has announced that they will raise prices of soap and detergent that are sold to China. This action by the two big Consumer goods giants brings to mind the challenges that the Beijing government would further face to curb inflation in the country.
China has been facing the chronic problem of inflation for over the past year. The government has been taking several steps to control the hyperinflation through several monetary and fiscal policies like raising the lending rates of banks.
Additionally, the government is also increasing the statutory reserve to be held by the banks before lending. This is to decrease liquidity in the hands of financial institutions. Many shops have reportedly sold their stock to increase supply in order to put a cap on soaring prices of essential commodities.
The shelves of shops were almost ransacked after the news of the anticipated price increase spread across the country. People went in for hoarding the detergents and soaps before the price increase could become effective.
Edwards to Enter S&P 500
A leading player in the field of heart valves and hemodynamic monitoring, Edwards Lifesciences (NYSE: EW), will be included in the S&P 500 index from April 1, 2011. Following this positive announcement, shares of the company edged up by 3.63% to close at $88.50 last Friday. The company believes that its solid performance over the past few quarters led to its inclusion in this august category.
Edwards in one of the leading players in the field of heart valve therapy which accounted for 59% of total revenues in the fourth quarter of fiscal 2010. Contribution from this segment has shown a steady pace in the past; from 47% in 2007 to 54% in 2009.
The company has a strong product portfolio with many of them having been launched in the recent past. Increased acceptance of these products and greater market penetration would lead to higher sales in the forthcoming period.
The successful launch of Sapien XT in Europe led to an 87.2% rise in transcatheter heart valve (THV) sales to $65.3 million during the fourth quarter of fiscal 2010. Edwards is expecting greater contribution from THV in the forthcoming period. Although Edwards has witnessed strong growth in the THV banking on the successful launch of Sapien products in Europe, the product is yet to receive approval in the US.
However, Edwards has been putting a lot of effort to get the Sapien products approved in the US and Japan. The company expects to launch Sapien THV in the US during the fourth quarter of 2011 and expects sales of approximately $20-$25 million.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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