CHICAGO, Sept. 21, 2011 /PRNewswire/ -- Zacks Equity Research highlights Humana, Inc. (NYSE: HUM) as the Bull of the Day and Gentiva Health Services (Nasdaq: GTIV) as the Bear of the Day. In addition, Zacks Equity Research provides analysis ConAgra Foods Inc. (NYSE: CAG), HJ Heinz Co. (NYSE: HNZ) and Kraft Foods Inc. (NYSE: KFT).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Humana, Inc.'s (NYSE: HUM) second-quarter earnings modestly beat the Zacks Consensus Estimate, owing to improved consolidated premiums and ASO fees that also drove the benefit ratio along with improvement in medical and specialty memberships. Humana benefits from the new rule in health care reform, which led to an efficient deployment of capital.
The upcoming AMS acquisition is further expected to enhance the company's Medicare coverage. Overall, we expect an upside to Humana shares on the basis of higher membership, surplus cash flows generation, favorable prior-period claims development, and higher projected segment earnings.
Our six-month target price of $89.00 equates to 11.6x our earnings estimate for 2011. Combined with the $1.00 per share annual dividend, this target price implies an expected total return of 20.7% over that period. This is consistent with our Outperform recommendation on the shares.
We have downgraded our recommendation on Gentiva Health Services (Nasdaq: GTIV) to Underperform, prompted by poor operating performance coupled with weakening financial position. The company's second-quarter earnings lagged the Zacks Consensus Estimate, on the back of high interest payments as well as increased expenses, resulting in a deteriorated cash position.
However, the strong growth in Hospice segment, driven by the Odyssey acquisition, led to a huge surge in revenue, which was offset by the rising costs. The company needs to engage in effective cost control, while continuing its current acquisition strategy.
Overall, the future outlook for Gentiva does not look very promising. Our six-month target price of $6.25 equates to 3.0x our earnings estimate for 2011. This price target implies an expected total negative return of 8.4% over that period.
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ConAgra Misses but Reaffirms
ConAgra Foods Inc. (NYSE: CAG) has reported first quarter of fiscal 2012 results, with diluted EPS (from continuing operations) of $0.20 compared with $0.32 in the year-ago quarter.
This decline of 38% reflects negative impact of short-term changes in the wheat market affecting the company's Commercial Foods segment and the inflationary pressures in the Consumer Foods segment. The results missed the Zacks Consensus Estimate of $0.31 per share.
ConAgra reaffirms expectation of fiscal 2012 full-year diluted EPS to grow at a low- to mid-single-digit rate, based on high inflation and increased marketing investments, over the comparable EPS of $1.75 during fiscal 2011. The company revised its full-year inflation expectations to 9-10% for the Consumer Foods segment from original estimate of 7-8%.
ConAgra Foods Inc. is one of North America's leading food makers operating in the Consumer Foods and Commercial Foods segments. The company, over time, has given tough competition to its peers such as HJ Heinz Co. (NYSE: HNZ) and Kraft Foods Inc. (NYSE: KFT), based on its cost-control measures on the backdrop of rising raw material prices as well as its product-line expansion program in a highly-competitive food industry.
We maintain a Neutral recommendation on the stock backed by a Zacks #4 Rank, which translates into a short-term Sell rating.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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