Zacks Bull and Bear of the Day Highlights: Edison International, Statoil, ConAgra Foods, Ralcorp Holdings and Bank of America
CHICAGO, Jan. 9, 2013 /PRNewswire/ -- Zacks Equity Research highlights Edison International (NYSE:EIX) as the Bull of the Day and Statoil ASA (NYSE:STO) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on ConAgra Foods, Inc. (NYSE:CAG), Ralcorp Holdings Inc. (NYSE:RAH) and Bank of America Corp. (NYSE:BAC).
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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:
We upgrade our long-term recommendation on Edison International (NYSE:EIX) from Neutral to Outperform, owing to the inherent business strength of its regulated utility Southern California Edison. Although the company reported a third quarter earnings miss, we attribute it to a delay in the 2012 General Rate Case (GRC) rate case decision and continuing losses at the Midwest Generation unit.
Owing to California's supportive regulatory environment, our bullishness on the company remains unfazed. Going forward, our bullish outlook for the company is supported by consistent performance throughout its solid base of stable regulated utility operations, a steady growth in its rate base and ongoing alternative energy projects in-line with the renewable energy mandate.
Also, the steadily rising dividend of Edison International adds extra shine to the stock. Thus we upgrade our rating on the stock from Neutral to Outperform with a price target of $56.00 based on a P/E of 17.4x our fiscal 2013 EPS estimate.
We are downgrading our recommendation on Statoil ASA (NYSE:STO) ADRs to Underperform from Neutral. The company reported lower-than-expected earnings in the third quarter, mainly due to high exploration costs and low liquids production with steep operating costs in Norway.
While reiterating its 2012 guidance, management now expects 2013 production to decline sequentially versus the previous flat forecast. While Statoil is fairly active in its development operations, we remain apprehensive as hiccups remain in the company's production growth for the time being.
Considering the aforementioned reasons, we are downgrading our long-term recommendation. Our $23 price objective, based on the 2013 P/E multiple of 8.0x, supports this view.
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ConAgra to Offer Up Shares
ConAgra Foods, Inc. (NYSE:CAG) announced offering sale of its shares worth $240.0 million through an underwritten public offering.
The total offer consists of approximately 8.1 million shares to be issued at a price of $29.50 (the closing price on December 31, 2012). In addition, the company has also offered the underwriter a 30-day option to purchase shares worth $35.0 million.
The proceeds from the issue will be utilized to fund ConAgra's pending acquisition ofRalcorp Holdings Inc. (NYSE:RAH) at a price of $90.0 per share. The acquisition was announced in late November last year. In case the acquisition does not get through, the proceeds will be utilized for general corporate purposes.
The acquisition, valued at $6.8 billion, is expected to be complete by March 2013, subject to regulatory approvals. Subsequent to the acquisition of Ralcorp, ConAgra will emerge as the largest private label packaged food company in North America. Management expects the combined entity to garner sales of over $18 billion in the future. Starting from the fourth year, ConAgra is expected to derive cost synergies of about $225 million per year from the acquisition.
BofA Merrill Lynch, a wing of Bank of America Corp. (NYSE:BAC), is the sole book running manager for the offering of common stock.
The company had a total of 405.8 million shares and a market capital of $12.18 billion at the close of trading on January 3, 2013.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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