Zacks Bull and Bear of the Day Highlights: CBS Corporation, Marathon Oil, Target Corporation, Wal-Mart Stores and Costco Wholesale Corporation
CHICAGO, Aug. 18, 2011 /PRNewswire/ -- Zacks Equity Research highlights CBS Corporation (NYSE: CBS) as the Bull of the Day and Marathon Oil Corp. (NYSE: MRO) as the Bear of the Day. In addition, Zacks Equity Research provides analysis Target Corporation (NYSE: TGT), Wal-Mart Stores Inc. (NYSE: WMT) and Costco Wholesale Corporation (Nasdaq: COST).
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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:
CBS Corporation's (NYSE: CBS) second-quarter 2011 earnings of $0.58 per share beat the Zacks Consensus Estimate of $0.45 and surged more than double from $0.25 earned in the year-ago quarter, buoyed by a favorable operating environment and cost-containment efforts. The quarter saw a step up in both the advertising marketplace as well as margins.
Management remains confident about continued growth momentum in fiscal 2011 and 2012. However, the significant potential risk is CBS's high dependence on advertising revenue, which is driven by the health of the economy. To mitigate this, the company is striving to add diverse revenue streams to hedge against economic cycles, which include retransmission, affiliate and online distribution fees.
Further, CBS's substantial liquidity, positions it to drive future growth and enhance shareholders return. We have a long-term Outperform recommendation on the stock. Our target price of $24.00, 12.8X 2011 EPS, reflects this view.
We are downgrading Marathon Oil Corp. (NYSE: MRO) shares to Underperform from Neutral following the company's second quarter miss and its clouded post-split outlook. Near-term upstream production profile remains muted without any meaningful large volume additions for the next few years.
The weaker-than-expected performance at the Droshky development in deepwater Gulf of Mexico and the suspension of the low cost Libyan operations are also causes for concern. Additionally, the transfer of the refining/sales operations has left Marathon with a less diversified business, thereby heightening its risk profile.
Our $25 price objective reflects a 2011 P/E multiple of 6.0x, which is within Marathon's historical trading range. The stock also carries a Zacks #5 Rank (Strong Sell) at this time.
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Target Beats Zacks Estimate
Target Corporation (NYSE: TGT) recently posted better-than-expected second-quarter 2011 results on the heels of higher sales and improved profitability across its credit card business.
The quarterly earnings of $1.03 per share beat the Zacks Consensus Estimate of 97 cents, and rose from 92 cents earned in the prior-year quarter.
The Zacks Consensus Estimate for the quarter increased by a penny with 5 out of 23 analysts covering the stock raising their projections and only one analyst lowering his or her estimate in the last 30 days.
Target's efficient marketing, multi-channel strategy, product innovation, compelling pricing strategy and new merchandise assortments should help drive comparable-store sales and operating margins over the long term. We expect the company to gain market share, and believe that more focus on consumable items should boost sales and earnings in a sluggish consumer environment.
Target now tends to focus more on store renovations and enhancing store sales productivity, introducing smaller format stores, and eyeing opportunities to open stores in the international markets.
The greater concentration of Target's revenue generating capability in a few regions of the United States poses a competitive threat compared to Wal-Mart Stores Inc. (NYSE: WMT) and Costco Wholesale Corporation (Nasdaq: COST), which are geographically more diversified and more resourceful.
Consequently, we prefer to have a long-term Neutral recommendation on the stock. Moreover, Target holds a Zacks #3 Rank, which translates into a short-term Hold rating.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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