Zacks Bull and Bear of the Day Highlights: Regeneron Pharmaceuticals, Avery Dennison, Plains All American Pipeline, BP and Enterprise Products Partners
CHICAGO, July 24, 2012 /PRNewswire/ -- Zacks Equity Research highlights Regeneron Pharmaceuticals (Nasdaq:REGN) as the Bull of the Day and Avery Dennison Corp. (NYSE:AVY) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onPlains All American Pipeline L.P. (NYSE:PAA), BP Plc. (NYSE:BP) and Enterprise Products Partners L.P. (NYSE:EPD).
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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:
We are upgrading Regeneron Pharmaceuticals (Nasdaq:REGN) to Outperform from Neutral ahead of its second quarter earnings results slated for July 25. Regeneron, which turned a profit in the first quarter of 2012, should continue performing well throughout 2012, driven by excellent growth prospects of Eylea.
We have increased our 2012 earnings estimates by $0.17 to $1.07 per share. Moreover, with three action dates and multiple pipeline related news lined up, the remainder of 2012 promises to be exciting for Regeneron, with a scope for significant stock price appreciation.
Consequently, we believe that the current price represents an attractive entry point for long-term investors. Based on 2012 sales estimates, the stock is trading at 10.8x, compared to the industry average of 4.2x. Our price target of $145.00 is based on P/S of 13.0x our 2012 sales estimate.
Avery Dennison Corp.'s (NYSE:AVY) first quarter 2012 adjusted EPS dipped 4% to $0.45 and revenues declined 3% to $1.48 billion. Since the second quarter of 2011, Avery has been plagued with weak volumes in its two major businesses: Pressure-Sensitive Materials and Retail Branding and Information Solutions.
Given the uncertain scenario, we do not expect a recovery in volumes in the near future. Avery generates one third of its revenue from Europe, and given the weak demand in the region, we maintain a cautious stance. Furthermore, rising raw materials prices, negative currency translation and slower growth following the sale of the Office and Consumer Products business remain headwinds.
We thus reiterate our Underperform recommendation on Avery Dennison with a target price of $27 per share. This target amounts to 13.6x our 2012 EPS estimate.
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Plains All American Kept at Outperform
We reiterate our Outperform recommendation on Plains All American Pipeline L.P. (NYSE:PAA) given its steady increase in cash distribution, strategic acquisitions, infrastructure expansion and a solid financial position. We believe that the partnership will face challenges from its Supply & Logistics segment with soft numbers in the second and third quarters following the historical trend.
We know that Plains All American Pipeline generates a major part of its revenue from low-risk fee-based activities. The partnership is often exposed to commodity risks due to delay in purchase of crude oil carried by third-party tankers. Although the partnership utilizes collaterals for hedges based on the market price of crude, volatility in crude oil pricing and market structures may negatively impact the partnership's financial performance.
Plains All American Pipeline's portfolio of crude oil pipelines and storage assets are strategically located in well-established oil producing regions that serve major U.S. refinery and distribution markets. We believe that the partnership's positional advantage will fuel its future performance.
At the same time, Plains All American Pipeline continues to increase its operations both internally and through strategic acquisitions. Under its organic growth program, the partnership constructed and expanded its pipeline systems, crude oil storage, and terminal and natural gas storage facilities. As part of its acquisition-oriented growth strategy, the partnership recently acquired BP Plc.'s (NYSE:BP) Canadian assets and expects a 10% production volume increase over first quarter 2012 volume.
During the partnership's first quarter 2012 earnings release, Plains All American Pipeline increased its annual adjusted EBITDA guidance by $150 million. The Zacks Consensus Estimate for the partnership's second quarter and full year 2012 earnings are currently pegged at $1.66 per unit and $5.16 per unit, respectively.
Plains All American Pipeline L.P. currently retains a Zacks #1 Rank, which translates into a short-term Strong Buy rating.
Houston, Texas-based Plains All American Pipeline owns assets strategically located in well-established oil producing regions, catering to major U.S. refinery and distribution markets. Other than organic growth opportunities, the partnership also relies on acquisitions to spur growth. The partnership competes with Enterprise Products Partners L.P. (NYSE:EPD).
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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