CHICAGO, April 11, 2012 /PRNewswire/ -- Zacks Equity Research highlights Cepheid Inc. (Nasdaq: CPHD) as the Bull of the Day and United Continental (NYSE: UAL) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Ford Motor Co. (NYSE: F),Toyota Motors (NYSE: TM) and Kraft Foods Group, Inc. (NYSE: KFT).
Molecular diagnostics company Cepheid Inc. (Nasdaq: CPHD) reported a strong fourth quarter with both revenues and earnings going past the Zacks Consensus Estimate. Apart from portfolio expansion, the company is expanding its international operations, which is encouraging.
While MRSA surveillance continues to be the largest test, its C. difficile test is gaining increasing acceptance. Placements for the HBDC program were encouraging, although Cepheid prefers to hold a cautious stand given funding uncertainties.
Based on an expanding test menu coupled with rising HAI costs, we expect GeneXpert placements to maintain an uptrend. With encouraging guidance for 2012, which exceeded our expectations, we upgrade the stock to Outperform.
We are downgrading our recommendation on United Continental (NYSE: UAL) to Underperform on projections of a weak first quarter. Although United Continental would benefit from merger synergies, global network, leading unit revenue growth, strong competitive position, fleet and network optimization, hedging strategies and a strong liquidity position, we believe surging fuel prices and the threat of recession in Europe pose downside risks to the stock.
Additionally, high non-fuel costs related to fleet optimization and product initiatives, high unionization, new advertising rules, competitive threats, and risks pertaining to the Continental integration could hurt the company's profitability going forward.
These negative factors are expected to overshadow the future growth prospects of United Continental. Thus, we have an Underperform rating with the target price of $19, based on 4.8x our earnings estimate for 2012.
Ford Motor Co. (NYSE: F) announced that it would recall 140,310 units of its top selling car Focus due to a problem with their passenger-side windshield wiper motors. The vehicles were manufactured between August 1, 2010 and October 18, 2011.
The filings with the National Highway Traffic Safety Administration (NHTSA) revealed that a seal in the wiper motor wiring could be missing, increasing the chance of water to get inside. The water inside the motor could cause the wiper to stop working, which could reduce visibility and increase the risk of a crash.
However, the automaker has not yet received any reports of injury or crash related to the problem. The company expects to notify the owners of the vehicles in the week beginning May 21. Its dealers will clean and seal the wiring free of charge and fix any non-functional wipers.
Focus is the best-selling car of Ford followed by Fusion. In the first quarter of 2012, the company sold 66,043 units of Focus and 63,949 units of Fusion, up 78.2% and down 1.7%, respectively, from the same period last year.
Automotive safety recalls were brought into focus by media after Toyota Motors' (NYSE: TM) announcement of the largest-ever global recall of 3.8 million vehicles in September 2009, triggered by a high-speed crash that killed 4 members of a family.
Later on, a string of recalls has led Toyota to face numerous personal injury and wrongful death lawsuits in federal courts. The Transportation Department of U.S. also imposed a fine of $48.4 million on the company due to late recall of millions of defective vehicles.
Ford, a Zacks #3 Rank (Hold) company, posted a 34% fall in profit to $797 million or 20 cents per share (before special items) in the fourth quarter of 2011 from $1.20 billion or 30 cents per share (before special items) in the same quarter of 2010. With this, the automaker has missed the Zacks Consensus Estimate by 7 cents per share. Total revenue during the quarter grew 6.5% to $34.6 billion. It was higher than the Zacks Consensus Estimate of $31.8 billion.
Kraft Foods Recalls Peanuts
Kraft Foods Group, Inc. (NYSE: KFT) recently announced that it is voluntarily recalling single code date of its Planters Cocktail Peanuts as it believes that the product might have been exposed to water not suitable for consumption during the production process. The company had sold around 3,000 cases of the recalled product to its retailers in the US and Puerto Rico.
Kraft warns the consumers not to consume the product of the affected code date and return the same to the store from where it was purchased. However, there have been no complaints made with respect to the product and thus we believe the recall will not have any material impact on the company's earnings.
Kraft Foods is in the process of separating into two independent public companies: a high-growth global snacks business and a high-margin North American grocery business. Global snacks will consist of the current Kraft Foods Europe and Developing Markets units as well as the North American snacks and confectionery businesses. The North American grocery business would consist of the current US Beverages, Cheese, Convenient Meals and Grocery segments and the non-snack categories in Canada and Food Service. The spin-off is expected to be completed before the end of this year.
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
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