Zacks Bull and Bear of the Day Highlights: CEMIG, Health Management Associates, Jamba, Starbucks and Caribou Coffee
CHICAGO, Nov. 27, 2012 /PRNewswire/ -- Zacks Equity Research highlights CEMIG (NYSE:CIG) as the Bull of the Day and Health Management Associates (NYSE:HMA) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Jamba Inc. (Nasdaq:JMBA), Starbucks Corporation (Nasdaq:SBUX) and Caribou Coffee Company Inc. (Nasdaq:CBOU).
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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:
CEMIG's (NYSE:CIG) 3Q12 results were impressive with its net income registering a 43% y/y increase and EPADR coming in at US$0.64. Net revenue grew 19% to US$2.4 billion on the back of a 1.7% increase in electricity sold to 17,715 GWh. We find the growth prospects for this Brazilian electricity utility bright.
Operating efficiencies, new projects and strategic acquisitions all bode well for the future. Moreover, with the growing electricity demand in Brazil as an important growth booster, the national agency predicts a consumption hike of about 4.5% in the 2011-2021 timeframe. The nation is growing faster with the government's increasing keenness to invest heavily in the electric industry.
The company is also doing every bit to increase its capacity in order to meet the escalating demand. Thus we upgrade our recommendation on the stock from Neutral to Outperform.
We downgrade our recommendation on Health Management Associates (NYSE:HMA) to Underperform. Its third-quarter 2012 earnings per share of $0.18 missed the Zacks Consensus Estimate. We are wary about sustained volume pressure on the back of sluggish adjusted admissions.
The expected year-over-year decline in same hospital admissions implies declining volume trends for Health Management, and lackluster demand may worsen matters. Bad debt is another looming concern and may hurt earnings.
We refrain from suggesting the stock and are waiting to see if the company's business model and benefits from Obamacare can help Health Management to overcome the current headwinds and reimbursement uncertainties. We have a price target of $7.50, which is based on a P/E of approximately 9.3x our fiscal 2012 EPS estimate.
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Jamba Plans to Expand in California
Jamba Juice Company, a subsidiary of Jamba Inc. (Nasdaq:JMBA), is planning a massive expansion in its home-court California, over the next six-to-seven years. The company's growth plans include the launch of up to 120 stores in more than 100 business areas and 25 mall locations across Northern, Central and Southern California.
Jamba Juice currently operates more than 788 stores. The company plans to open the new stores through both new and existing franchises. It is also preparing for the launch of many company-owned stores.
The company's founding state, California, remains an ideal location for development as it is one of the most populous and widespread state in the U.S. The promising restaurant industry in this state is a major driving force to the U.S. economy. In 2012, the total revenue from the restaurant sector in California is projected around $63.8 billion.
We believe that the development plan will further strengthen Jamba Juice's position in its prime California market, going forward. However, the company will likely face stiff competition in that area from its peers like Starbucks Corporation (Nasdaq: SBUX) and Caribou Coffee Company Inc. (Nasdaq: CBOU).
Jamba has always remained focused on expansion and expects accelerated growth in both core existing markets as well as new geographic areas. For 2012, Jamba plans to open 40–50 new stores in the U.S. locations and 15 new stores internationally. In 2013, the company plans to further speed up its development process by opening 60 to 80 U.S. and international stores.
Jamba, currently carries a Zacks #3 Rank, which translates into a short-term 'Hold' rating. Our long-term recommendation for the stock remains Underperform.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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