Zacks Bull and Bear of the Day Highlights: ImmunoCellular, Willis Group Holdings, Encana, Exxon Mobil and Cenovus Energy
CHICAGO, Feb. 21, 2012 /PRNewswire/ -- Zacks Equity Research highlights ImmunoCellular (OTC: IMUC) as the Bull of the Day and Willis Group Holdings (NYSE: WSH) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Encana Corporation (NYSE: ECA),Exxon Mobil Corporation (NYSE: XOM) and Cenovus Energy (NYSE: CVE).
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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:
ImmunoCellular (OTC: IMUC) is a clinical stage biotech company focused on the research and development of innovative cancer therapeutics. The company's lead drug candidate ICT-107 is a next-generation cancer vaccine targeting cancer stem cells to prevent recurrence.
ICT-107 has demonstrated the best clinical data for glioblastoma so far and is under a Phase II trial. ICT-107 holds a high promise for glioblastoma and has potential for other cancers. IMUC also has a pipeline based on its off-the-shelf peptide vaccine technology and monoclonal antibody technology, which ensures sustainable growth for the company.
IMUC is heading in the right direction and poised to deliver shareholder value. We think at this time IMUC should be valued between $200 and $300 million in market cap. Our $7.00 per share price target represents a market cap of $266 million.
Willis Group Holdings (NYSE: WSH) reported fourth quarter adjusted earnings per share of $0.46, a penny lower than the Zacks Consensus Estimate and 19.3% lower than the year-ago earnings. The lower numbers resulted from lower commissions and fees and investment income coupled with higher expenses. The top line also lagged expectations and the year-ago result.
Willis Group completed its operational review in 2011 and expects an incremental cost savings of approximately $55 million in 2012, reaching annualized savings of approximately $135 million. However, the weakness in the US economy will remain a headwind and restrict any significant top-line growth in the company.
We retain our Underperform rating on Willis Group. Our six-month target price of $31.00 equates to about 10.3x our earnings estimate for 2012. This target price along with an annual dividend of $1.04 implies an expected negative return of about 8.7% over that period.
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Gas Price Collapse Hurts Encana
Canada's largest natural gas producer Encana Corporation (NYSE: ECA) reported weak fourth quarter results, primarily reflecting low natural gas prices.
The company announced operating earnings per share (excluding one-time items) of 6 cents, below the Zacks Consensus Estimate of 8 cents and the year-ago income of 7 cents.
However, revenues (net of royalties) came in at $2.5 billion, up 72.0% year over year and 36.7% above the Zacks Consensus Estimate, driven by higher production.
For its fiscal year ended December 31, 2011, Encana reported profit of 54 cents per share on revenues of $8.5 billion.
Production & Prices
Production was up approximately 7.4% year over year to 3,602 million cubic feet equivalent per day (MMcfe/d), primarily due to a 7.1% rise in natural gas production (from 3,230 MMcf/d in the fourth quarter of 2010 to 3,459 MMcf/d). In particular, natural gas volumes from key resource plays reached 3,366 MMcfe/d, up 7.9% year over year. Gas output benefited from strong growth in Haynesville shale in Texas/Louisiana.
For the year ended December 31, 2011, production of natural gas and liquids reached 3,477 MMcfe/d, up 4.7% from 2010.
Realized natural gas prices during the quarter were down approximately 4.8% year over year to $4.79 per thousand cubic feet (Mcf).
Cash Flows and Drilling Statistics
Encana – North America's number two producer of natural gas, only behind Exxon Mobil Corporation (NYSE: XOM) – generated cash flows from operations of $976 million or $1.32 per share, as against $917 million or $1.25 per share during the December quarter of 2010. The company drilled 360 net wells during the quarter, as against 760 in the prior-year period.
Capital Spending and Balance Sheet
Encana's capital investments during the quarter were $1.0 billion (excluding acquisitions and divestitures), while the full-year outlay came to $4.6 billion. As of December 31, 2011, Encana had cash on hand of $732 million and long-term debt (including current portion) of $8.1 billion, representing a debt-to-capitalization ratio of 33.1%.
Asset Sale Update
As part of its efforts to weather low gas prices and put resources into developing the more profitable liquids-rich projects, Encana announced an agreement with Japanese giant Mitsubishi Corporation to offload a major stake in its British Colombia gas assets for $2.9 billion.
Proved Reserves
As of year-end 2011, Encana had 14.2 trillion cubic feet equivalent (Tcfe) in proved reserves, of which more than 94% was natural gas. The company's 2011 year-end proved reserves tally was down slightly (by 0.7%) from the year-earlier level.
Guidance
The company said that it expects full-year 2012 natural gas production to be 2,800–3,100 MMcf/d and oil output of 28,000 barrels per day. Capital spending is likely to be some $2.9 billion, a decline of about 37% from 2011 level. Encana also guided towards 2012 cash flow of $4.75 per share.
Rating & Recommendation
Encana, which spun off its oil sands business into a separate, independent and publicly traded company Cenovus Energy (NYSE: CVE) in 2009, currently retains a Zacks #3 Rank, translating into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.
Encana has one of the largest natural gas resource portfolios in North America, which provides a diverse/high quality inventory of reserves. We see a solid long-term future for the company as demand for natural gas soars, spurred by its cost effectiveness and abundant supply in North America. Furthermore, we appreciate Encana's strategy realignment to direct most of its 2012 spending on liquids-rich plays.
However, the Calgary, Alberta-based firm's sizeable exposure to weak natural gas prices offsets these strengths and remains a key area of concern, in our view.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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