Zacks Bull and Bear of the Day Highlights: Caterpillar, POSCO -- ADR, ExxonMobil, BP Plc and ConocoPhillips
CHICAGO, April 4, 2012 /PRNewswire/ -- Zacks Equity Research highlights Caterpillar Inc. (NYSE: CAT) as the Bull of the Day and POSCO - ADR (NYSE: PKX) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on ExxonMobil Corporation (NYSE: XOM),BP Plc (NYSE: BP) and ConocoPhillips (NYSE: COP).
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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:
Caterpillar Inc.'s (NYSE: CAT) fourth-quarter EPS increased 53% to $2.25 and revenues surged 35% to a record $17.2 billion, driven by increased machine demand. Results were way ahead of Zacks Consensus Estimates.
With the Bucyrus acquisition, the company is positioned to be the #1 mining equipment manufacturer in the U.S. with a strong footing in the major mining markets of China and India. Caterpillar's backlog is at a record level, which holds promise for the year ahead. We believe Caterpillar's expansion plans of opening new facilities and furthering existing operations, particularly in the emerging markets, will boost its long-term potential.
Furthermore, the company's top line will continue to grow on the back of increasing demand for construction and mining equipment. We maintain our Outperform recommendation and set a target price of $128.00.
POSCO - ADR (NYSE: PKX) reported disappointing financial results in 2011 with the company's net earnings falling roughly 12% year over year. Weak margins due to higher raw material costs led to the downfall.
Though the company's focus on expansion in the fast growing markets, such as graphene and synthetic natural gas, and investments in raw materials should be advantageous, the positive momentum suffers a setback in the near term due to global uncertainty.
Steel demand remains soft and lags behind supply, which in turn is hurting prices. Competition is increasing, impeding growth and restricting the stock's performance. Thus, we lower our recommendation from Neutral to Underperform with a 6-month target price of $77 per ADR.
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Exxon, BP, Conoco in Alaska Deal
ExxonMobil Corporation (NYSE: XOM), along with its partners, has entered into an agreement with the U.S. state of Alaska, whereby the participating companies will jointly work on the development of resources in the region.
ExxonMobil, the operator, together with BP Plc (NYSE: BP), ConocoPhillips (NYSE: COP) and TransCanada, have proposed to construct a $26 billion pipeline, capable of carrying 70,000 barrels per day of liquids into the Trans Alaska Pipeline System. The pipeline intends to preserve the leases of the participating companies.
The four oil companies have planned to make North Slope natural gas resources profitable within an Alaska Gasline Inducement Act (AGIA) framework. The companies plan to begin natural gas production in the Point Thomson field by May 2016 – with an initial yield of 10,000 barrels per day of natural gas condensate and 200 million cubic feet of natural gas. A new pipeline and a natural gas liquefaction terminal will also be required for making gas available to the market.
The settlement reconciles a long-standing row over the Point Thomson field – located about 95 kilometers east of Prudhoe Bay and estimated to hold around 300 million barrels of oil and 8 trillion cubic feet of natural gas. The resolution will likely enhance oil production in Alaska and pave way for exports of liquefied natural gas to the promising markets in Asia.
Per the sources, the companies' leases date back to 1977, while Alaska cancelled the leases in 2006, alleging the companies of deferring development of resources in the area. The companies, on the other hand, contended that Alaska wanted them to bring the Point Thomson field online prior to it being economically feasible. However, to prevent the suspension, the companies took legal recourse that reached the state Supreme Court.
ExxonMobil and BP hold the Zacks #3 Rank, which is equivalent to a Hold rating, while ConocoPhillips holds a Zacks #2 Rank, which translates into a Buy rating, for a period of one to three months. Longer term, we maintain a Neutral recommendation on all the three companies.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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