Zacks Bull and Bear of the Day Highlights: McKesson, Sunoco, Ford Motor, General Motors and Toyota Motor
CHICAGO, June 28, 2011 /PRNewswire/ -- Zacks Equity Research highlights: McKesson Corp. (NYSE: MCK) as the Bull of the Day and Sunoco Inc. (NYSE: SUN), as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Ford Motor Co. (NYSE: F), General Motors Company (NYSE: GM) and Toyota Motor Corp. (NYSE: TM).
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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:
McKesson Corp.'s (NYSE: MCK) fourth quarter fiscal 2011 earnings of $1.66 per share outpaced the Zacks Consensus Estimate and the year-ago earnings. Revenues climbed 8% to $28.9 billion. McKesson's fiscal 2012 guidance was also above expectations. The company expects fiscal 2012 earnings in the range of $5.99 and $6.19 per share.
Following the earnings announcement, we raised our 2012 earnings estimate by 50 cents to $6.10. Based on the company's performance and guidance, we are upgrading McKesson to Outperform. We believe that the company will continue performing well.
Factors like an aging population, increased use of generics and growing demand for specialty pharmaceutical products should help drive growth in the Distribution Solutions segment. We currently have a target price of $100.00 on McKesson.
We are maintaining our Underperform recommendation on Sunoco Inc. (NYSE: SUN), based on a number of issues that have stalled the company's stock price. Sunoco's operational reliability issues and increased unscheduled downtime have overshadowed its strong quarterly results and gains from successful restructuring initiatives over the last two years.
Rising crude oil prices have added to Sunoco's challenges by increasing the cost of production. Pitfalls from the ArcelorMittal litigation settlement, as well as the lack of geographic diversification and refining flexibility, have also become major liabilities for Sunoco, in our view.
Given these headwinds, we expect Sunoco shares to be under pressure in the near future. Our $37 price objective reflects a 2011 P/E multiple of 42.1x.
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Ford China Breaking New Ground
Ford Motor Co. (NYSE: F) broke ground on a $500 million engine plant in the southwestern city of China, Chongqing. The plant, once in full swing in 2013, will double the production capacity of its joint venture (JV), Changan Ford Mazda Automobile Co., to 750,000 units per year. The engines will be used in Ford branded vehicles built and sold in China.
Ford has embarked upon an aggressive expansion plan in China that includes plans to triple its lineup in China by introducing 15 models, including the Kuga small sport utility vehicle by 2015. In order to develop these new models, Ford will build new plants raising its capital spending to about $6 billion annually by mid-decade from $3.9 billion in 2010 and the projected $5.5 billion in 2011.
Ford anticipates global sales to expand by 50% to 8 million vehicles by 2015 given the potential growth in Asia, mainly China and India; and rising demand for small cars. The automaker anticipates small cars to account for 55% of the total sales by 2020 compared with 48% presently. One third of the small car sales are expected to come from Asia.
In order to support the increasing sales, Ford also aims to triple its dealership to 340 in India and double in China (adding 100 dealerships this year) to 680 by 2016.
Apart from the $500 million engine plant, Ford signed an MOU in May to build its first transmission plant in Chongqing, with an initial annual capacity of 400,000 units per year. In July last year, the company's another JV, Jiangling Motors Corporation, also initiated construction of a $300 million vehicle assembly plant in Nanchang. Early 2012, Ford''s second passenger-car assembly plant in Chongqing will begin production of the new Ford Focus.
Ford has been gearing to catch up with its rivals in the world largest auto market. Currently, the automaker holds 2.4% of the passenger-vehicle market in the country. It has been lagging behind the big players in the China, including General Motors Company (NYSE: GM), Toyota Motor Corp. (NYSE: TM), Volkswagen AG, Hyundai Motor Co. and their respective joint ventures.
The company plans to expand its production capacity in China to 1.1 million vehicles by 2012. It will spend $1.6 billion to build 4 plants in the country by 2012. In contrast to this, GM, which already produces more than 2.8 million vehicles per year, has targeted to grow its production capacity to 3.7 million vehicles by 2015.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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