Zacks Bull and Bear of the Day Highlights: Mylan, JAKKS Pacific, Chevron, BP plc and ExxonMobil
CHICAGO, Jan. 30, 2012 /PRNewswire/ -- Zacks Equity Research highlights Mylan, Inc. (Nasdaq: MYL) as the Bull of the Day and JAKKS Pacific (Nasdaq: JAKK) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Chevron Corp. (NYSE: CVX),BP plc (NYSE: BP) and ExxonMobil Corporation (NYSE: XOM).
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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:
Mylan, Inc. (Nasdaq: MYL) is one of the leading players in the US generics market. The company holds immense potential as many blockbuster drugs have begun to go off-patent and many more will lose patent exclusivity in the next few years.
Moreover, we are encouraged by Mylan's geographic reach and product depth along with a robust generic product pipeline. We believe the generic segment will post strong sales in 2012 benefiting from a slew of product launches already lined up.
We have therefore upgraded our rating on Mylan from Neutral to Outperform to reflect our overall bullish stance for generic makers. Our target price for the stock is $26.00.
Challenging holiday sales hit JAKKS Pacific (Nasdaq: JAKK) badly, which consequently made the company cut its fiscal 2011 guidance. The labor shortage in Asia and an increase in input costs also remained a drag on the stock.
An underperformance in the third quarter's top and bottom line makes us cautious on the stock. Hence, we downgrade the stock from Neutral to Underperform recommendation.
Our six-month target price of $13.00 equates to about 13.0x our estimate for 2012. The target price implies an expected total return of negative 10.1% over that period.
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Chevron Reports Mixed 4Q
U.S. energy giant Chevron Corp. (NYSE: CVX) reported mixed fourth-quarter and fiscal 2011 results, riding on higher oil prices and stronger refining margins, partially offset by reduced volumes and higher operating costs.
Earnings per share (excluding adjustments for foreign-currency effects) came in at $2.61, missing the Zacks Consensus Estimate of $2.86. Quarterly results were also below the year-ago adjusted profit of $2.68.
For the full year, earnings stood at $13.38, slightly missing our projection of $13.49. Comparing year over year, earnings improved 38.1% from $9.69.
Quarterly revenue of $59,985 million was 11.0% higher than the prior-year level of $54,027 million. However, this also failed to meet our projection of $74,431 million.
Chevron generated revenue of $253,706 million in fiscal 2011, compared with $204,928 million in 2010. The fiscal result also surpassed the Zacks Consensus Estimate of $250,935 million.
Outlook
Chevron's production outlook remains promising, with a number of major deepwater projects scheduled to come online during the next few years. The company is also progressing with the prominent Wheatstone liquefied natural gas ("LNG") venture in Australia.
We believe that Chevron, based on its Wheatstone project coupled with the other major Gorgon Project, will hold the leadership position among natural gas and LNG suppliers in the Asia-Pacific belt. These massive resource ventures aim at providing considerable economic benefits such as employment, government revenue and local business opportunities.
We also appreciate Chevron's initiatives to trim its less lucrative refining/marketing operations and concentrate on the high profit generating exploration and production business. In this regard, the company is already in the process of selling various downstream properties in more than 20 counties, including Spain, Caribbean and southern Africa.
Our Recommendation
Chevron is one of the largest integrated energy companies in the world and has an impressive business model. Its current oil and gas development project pipeline is among the best in the industry, boasting of large, multi-year projects. Additionally, Chevron possesses one of the healthiest balance sheets among peers that help it to capitalize on investment opportunities as well as pursue strategic acquisitions.
However, due to its integrated nature, Chevron is particularly susceptible to the downside risk from continued weakness in the global economy. We are also concerned by the company's high level of capital spending and competition from peers like BP plc (NYSE: BP) and ExxonMobil Corporation (NYSE: XOM).
As such, we see the stock performing in line with the broader market and are maintaining our long-term Neutral recommendation.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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