Zacks Bull and Bear of the Day Highlights: Gentiva Health Services, Best Buy, CareFusion, Baxter International and Becton, Dickinson and Company
CHICAGO, Aug. 27, 2012 /PRNewswire/ -- Zacks Equity Research highlights Gentiva Health Services (Nasdaq:GTIV) as the Bull of the Day and Best Buy (NYSE:BBY) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onCareFusion (NYSE:CFN), Baxter International Inc. (NYSE:BAX) and Becton, Dickinson and Company (NYSE:BDX)
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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:
Gentiva Health Services (Nasdaq:GTIV) was upgraded from Neutral to Outperform based on its strong revenues and strategic acquisitions. The company's second quarter earnings surpassed the Zacks Consensus Estimate but lagged the year ago results on the back of lower revenues, particularly in the Home Health segment.
The company offers skilled nursing and therapy services, paraprofessional nursing services and homemaker services primarily to adult and elderly patients through licensed and Medicare-certified agencies. It serves patients in more than 420 locations across 41 states as of June 30, 2012, and operates in the Home Health and Hospice segments.
Gentiva reported second quarter 2012 operating net earnings of $0.35 per share, $0.07 ahead of the Zacks Consensus Estimate of $0.28, but lower than the year ago quarter level of $0.47 per share.
Our six month target price of $13.00 equates to 10.5x our earnings estimate for 2012. This price target implies an expected total return of 18.1% over that period. This is consistent with our Outperform recommendation on the shares.
Best Buy (NYSE:BBY) was recently downgraded from Neutral to Underperform. The downgrade comes following dismal second quarter 2013 results. The quarterly earnings of $0.20 per share fell 49% from year ago levels and missed the Zacks Consensus Estimate of $0.31. Total revenue also declined 2.8% to $10,547 million during the quarter. Comparable-store sales fell 3.2%, reflecting decline of 1.6% at Domestic segment and 8.2% at International division.
Best Buy is a multinational specialty retailer of consumer electronics, home office products, entertainment software, appliances and related services. The company is facing mounting pressure from online services that are able to offer products at lower costs. The founder of the company, who owns approximately 20% of the stock, is looking to take the company private with the help of private equity groups.
We recently downgraded our long term recommendation on the stock to Underperform from Neutral following the company's dismal second-quarter
2013 results. Over the last five years, Best Buy's shares have traded in a wide range of 4.3X to 17.4X trailing 12-month earnings. Our target price of $16.00 equates to a 4.6x multiple 2013 EPS.
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Product Recall Woes for CareFusion
Recently, CareFusion (NYSE:CFN), a medical technology company, announced the voluntary recall of its Alaris Pump Module, Model 8100. The recalled lot was manufactured between October 2011 and February 2012.
The product recall was issued due to a latent risk which might cause the door keypad overlay of the pump module to separate from the keypad assembly. It was seen to be a flaw which could lead to detrimental and fatal consequences.
As per the U.S. Food and Drug Association (FDA), this voluntary product recall is a Class 1 recall. A Class 1 recall is specified as the recall of a product having a considerable probability of serious adverse health or fatal consequences associated with the use of defective units.
The company notified that the door assembly of the related pump modules will be substituted within a period of 60 days. Meanwhile, consumers have been advised to visually monitor the pump module keypad overlay for any explicit indication of overlay separation.
Product recall woes at CareFusion continue. Earlier this year, the company initiated a voluntary recall of its EnVe ventilators and AirLife Infant Breathing Circuit in July and May, respectively. The voluntary recall of EnVe ventilators applies to those manufactured between December 2010 and January 2012.
With regard to AifLife Infant Breathing Circuit, the company found that the equipment sub-part known as an adapter manufactured between June 1, 2010, and February 3, 2012, had on occasion developed a crack during patient use. It had resulted in leakage and loss in the intended tidal volume.
Amidst safety concerns and manufacturing defects associated with its products, concerns about CareFusion's production capabilities have also grown. It has to be accepted that this could lead to a loss in consumer confidence and trust. The costs associated with the recalls and remediation plans is also a matter of concern for the company.
CareFusion is a medical technology company with a global presence. It also plans to extend its international footprint. The company is committed to boosting its bottom-line on the back of portfolio innovation and enhancement and operational efficiencies. Helped by a diversified revenue base of industry leading offerings, the company is well poised to accelerate growth.
It competes with Baxter International Inc. (NYSE:BAX) and Becton, Dickinson and Company (NYSE:BDX) in certain niches.
CareFusion currently retains a Zacks #2 Rank, which translates into a short-term Buy rating.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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