Zacks Bull and Bear of the Day Highlights: Joy Global, BioMarin Pharmaceutical, The Coca Cola Company, Coca Cola Enterprises and Pepsico
CHICAGO, April 27, 2011 /PRNewswire/ -- Zacks Equity Research highlights: Joy Global (Nasdaq: JOYG) as the Bull of the Day and BioMarin Pharmaceutical Inc. (Nasdaq: BMRN) the Bear of the Day. In addition, Zacks Equity Research provides analysis on The Coca Cola Company (NYSE: KO), Coca Cola Enterprises (NYSE: CCE) and Pepsico, Inc. (NYSE: PEP).
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Here is a synopsis of all five stocks:
We are encouraged by the long-term fundamentals of the mining industry, which provides Joy Global (Nasdaq: JOYG) with substantial growth potential as conditions improve in the U.S., China and India. The company's first quarter earnings were almost in line with estimates on a significant pick-up in the company's orders.
Additionally, management's impressive cost-restructuring initiatives, together with expectations of increased spending plans on part of the mining industry, should help the company stay ahead of the curve, in our view.
Given the company's robust 2011 outlook and improving mining industry fundamentals, we see Joy Global shares performing ahead of the broader market going forward and maintain our Outperform recommendation on the stock.
We are downgrading BioMarin Pharmaceutical Inc. (Nasdaq: BMRN) to Underperform from Neutral following the below-par showing of the company in the final quarter of 2010. Earnings were hurt by lower-than-expected revenues. We were disappointed with the continued weak performance of Aldurazyme and the slow Firdapse ramp.
Moreover, we expect cash burn to increase since the company is investing heavily in its pipeline. Any negative news regarding the pipeline would have an adverse impact on the stock.
The early/mid-stage pipeline at BioMarin also concerns us. These headwinds cause us to believe that there is little reason for investors to own the stock at current levels. Our target price is $24.00.
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Coca Cola Goes Flat in Q1
The Coca Cola Company (NYSE: KO) reported earnings per share of 86 cents for the first-quarter 2011, missing the Zacks Consensus Estimate by 1 cent. However, it was higher than the year-ago EPS of 69 cents by 24.63%.
Quarterly Details
During the reported quarter, Coca-Cola's net revenues saw a robust growth of 40% to $10,545 million from $7,525 million in the year-ago period. The growth was mainly attributable to a 4% increase in concentrate sales, 2% currency benefit, favorable impact of price-mix ratio and the acquisition of CCE's North American operations, partially offset by the effect of structural changes.Global unit case volume increased 3% in the quarter.
Geographically, the Eurasia & Africa division witnessed volume growth of 8% year-over-year led by Russia, which surged 24%, followed by Turkey at 20%,14% in China, 11% in Mexico, 9% in India, 8% in South Korea and 4% in Germany.
The Latin American segment volumes increased 7% driven by Mexico (14%), Brazil (2%) and (9%) growth in South Latin Region. While North America recorded 6% volume growth, Pacific region and Europe witnessed a 5% and 1% volume growth respectively.
Coca-Cola's gross profit during the quarter soared by 32% to $6,589 million compared to $4,984 million a year ago. Gross margin contracted 370 basis points to 62.5% versus 66.2% in the prior-year quarter, due to increased commodity costs. The operating profit increased by 4% to $2,503 million from $2,279 million in the prior-year period.
Balance Sheet, Cash Flow and Share Repurchase
Coca-Cola exited the year with $9,075 million in cash and cash equivalents and a long-term debt-to-capitalization of 28.2%. During the first quarter of 2011, the company generated $458 million of cash from operations and deployed $1,047 million cash for investing activities and $986 million for financing activities.
During the first quarter, the Company was actively engaged in hedging activities principally related to commodity exposures associated with the North American business acquired from Coca Cola Enterprises (NYSE: CCE). During the first quarter, this hedging activity resulted in net unrealized gains of $36 million.
Management reported that the Coca-Cola Refreshments ("CCR") integration efforts are as per schedule. They are expected to generate 2011 net cost synergies of $140 to $150 million. Company-wide productivity initiatives are also on track with a target of $500 million annualized savings by year-end 2011.
Coca Cola which competes with Pepsico, Inc. (NYSE: PEP) currently holds a Zacks #3 Rank. On a long-term basis, we maintain a Neutral rating on the stock, which translates into a short-term Hold rating. Get the full analysis of all these stocks
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