CHICAGO, April 20, 2012 /PRNewswire/ -- Zacks Equity Research highlights: ProAssurance Corp. (NYSE: PRA) as the Bull of the Day and Agnico-Eagle Mines, Ltd. (NYSE: AEM) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on ConAgra Foods Inc. (NYSE: CAG), HJ Heinz Co. (NYSE: HNZ) and Kraft Foods Inc. (NYSE: KFT).
ProAssurance Corp.'s (NYSE: PRA) fourth-quarter earnings surpassed the Zacks Consensus Estimate on the back of an improved top line. Additionally, enhanced operating cash flow and asset position aided in driving the book value of shares. Higher operating cash flow is also likely to translate into enhanced operating leverage and generation of excess capital for share repurchases.
Though the intense price and product competition, weak rate environment, loss cost trends and regulatory challenges limit the desired upside in the sector, we believe the benefits of geographic diversity, aggressive claims defense, stable ratings, improving ROE and strong financial position are likely to have a positive impact on the company over time.
Our six-month target price of $104.00 per share equates to about 14.6x our earnings estimate for 2012. Combined with the $1.00 per share annual dividend, this target price implies an expected return of 20.8% over that period, which is consistent with our Outperform recommendation.
We are downgrading our recommendation on Agnico-Eagle Mines, Ltd. (NYSE: AEM) to Underperform, factoring in the challenges the company faced in 2011. Fourth-quarter 2011 adjusted earnings missed the Zacks Consensus Estimate. On a reported basis, the company slipped to a loss in the quarter on account of a partial writedown of the value of its Meadowbank mine.
Agnico also missed its production and cost targets in 2011. The company's production was disrupted by a fire at its Meadowbank mine while geotechnical issues forced it to suspend operations at its Goldex mine. Total payable gold production declined to 985,460 ounces in 2011 from 987,609 ounces in 2010 due to the suspension of operations at Goldex and lower than expected ore grades milled at the LaRonde and Meadowbank mines.
Our long-term Underperform recommendation on the stock indicates that it will perform below the market. Our target price of $31 is based on 17.4x our 2012 EPS estimate.
ConAgra Foods Inc. (NYSE: CAG) has been significantly expanding its business portfolio over time, focusing on branded and value-added opportunities. Acquisition of a number of private labels paved way for such expansion; the latest on its list is the nation's second largest frozen breakfast sandwich producer, Odom's Tennessee Pride.
Earlier this week, ConAgra announced its plan to acquire Odom's Tennessee Pride. The later registers annual revenue of over $190 million, working with a team of around 750 employees. The company will be acquiring Odom's facilities in Little Rock, AR and Dickson, TN along with its headquarters in Madison, TN.
In spite of macro-economic threats, ConAgra has been significantly expanding its business – a successful reflection of which was the company's recent third-quarter results. Further ahead, management hopes to see growth opportunities with recent signs of modest job recovery and recession in gasoline prices.
The recent acquisition is expected to support and carry forward such growth plans. ConAgra's CEO Gary Rodkin, was quite optimistic on the acquisition, as he hopes that this stride will allow the company to strengthen its portfolio across growing breakfast category. The financial terms of the acquisition have not yet been disclosed.
The acquisition, backed by the optimism of product line expansion and diversification, is envisaged to offer stiff competition to many of the industry players including, HJ Heinz Co. (NYSE: HNZ) and Kraft Foods Inc. (NYSE: KFT). Moreover, ConAgra expects the rate of input cost inflation to moderate in the upcoming quarters and envisages improved plant efficiencies.
We hold a Neutral recommendation on ConAgra over the long term. However, ConAgra retains a Zacks #4 Rank, implying a short-term (1-3 months) Sell rating.
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
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