Zacks Bull and Bear of the Day Highlights: RenaissanceRe Holdings, Ryder System, Noble Energy, Unit Corporation and Anadarko Petroleum
CHICAGO, July 13, 2012 /PRNewswire/ -- Zacks Equity Research highlights RenaissanceRe Holdings, Ltd. (NYSE:RNR) as the Bull of the Day and Ryder System, Inc. (NYSE:R) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onNoble Energy Inc. (NYSE:NBL), Unit Corporation (NYSE:UNT) and Anadarko Petroleum Corporation (NYSE:APC).
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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 our recommendation on RenaissanceRe Holdings, Ltd. (NYSE:RNR) to Outperform on the heels of the positive trend in premiums growth, increase in reinsurance capacity through the formation of Timicuan, stable ratings and regular dividend hikes. RenaissanceRe's first quarter earnings surpassed the Zacks Consensus Estimate owing to higher underwriting income arising from lack of catastrophic events in the quarter.
While premiums and investment income exhibited growth, expenses also declined substantially, thereby boosting the bottom line. Moreover, improved financial leverage, cash balance and ROCE boosted the financial position. Additionally, enhanced operating leverage due to strategic divestitures along with efficient capital deployment are the other positives.
Our six-month target price of $91.00 per share equates to about 9.8x our earnings estimate for 2012. Combined with the $1.08 per share annual dividend, this target price implies an expected total return of 20.8% over that period. This is consistent with our Outperform recommendation.
We have downgraded our recommendation on Ryder System, Inc. (NYSE:R) to Underperform from Neutral. Despite the company's strong performance in the first quarter, the company slashed its near-term earnings and revenue estimates.
The company foresees lower demand trend in some of its product lines and also expects compensation expenses to increase, given higher medical benefit costs. Amid ongoing economic uncertainties, the company has continued to invest in its fleet management solutions, which is also weighing on its liquidity position and increasing debt obligations.
Moreover, stiff competition from peers could interrupt the near-term growth trajectory of the company. Hence, we have an Underperform recommendation on the stock with a target price of $31, based on 8.3x our earnings estimate for 2012.
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Noble Energy Seals $617M Asset Sale
Oil and natural gas exploration company Noble Energy Inc. (NYSE:NBL) inked an agreement for sale with Unit Petroleum Company, a wholly owned subsidiary of Tulsa, Oklahoma-based Unit Corporation (NYSE:UNT). Per the agreement, Noble Energy will divest its non-core oil and natural gas assets in western Oklahoma and Texas Panhandle for an amount of $617 million. The agreement is expected to close in September 2012.
As per the deal, Unit Corporation will own 900 oil and gas producing wells on roughly 84,000 acres in the Granite Wash and Marmaton fields of western Oklahoma and Texas Panhandle. As of the effective date, net production was 60 million cubic feet equivalent per day with net proved reserves of approximately 250 billion cubic feet equivalent.
Output mix consists of 65% natural gas, 27% natural gas liquids, and 8% crude oil. Unit Corporation plans to finance the acquisition through issue of long term debt.
This divestiture was part of Noble's previously announced strategic plan to divert capital and human resources to high value areas. The funds will increase its financial flexibility to execute international programs and enhance its horizontal crude oil operations in the DJ Basin in Colorado and Wyoming.
Noble Energy has been involved in high profile agreements which will aid in improving its topline position. The company in the first quarter of 2012 entered into a 15 year agreement with Israel Electric Corporation Limited ("IEC") for sale of 2.7 trillion cubic feet of natural gas, which is expected to significantly augment Noble's earnings prospects. Noble's market share will likely be strengthened on the basis of this sales. This is slated to render its portfolio attractive to investors.
The company anticipates second quarter 2012 average sales volume to be around 224–232 thousand barrels of oil equivalent per day (MBoe/d), while it retains its 2012 guidance at 244–256 MBoe/d. The company expects natural gas and liquid production in the second quarter to be affected by a planned maintenance outage at the Alba facilities in Equatorial Guinea.
The Zacks Consensus Estimates for the second quarter and full year of 2012 is currently estimated at $1.21 per share and $5.93 per share respectively.
Noble Energy's closest competitor is
Anadarko Petroleum Corporation APC). Anadarko has joined forces with an undisclosed party to develop Lucius oil and natural gas field in its deepwater Gulf of Mexico operations. The company sold 7.2% working interest of its Lucius play and in return received $556 million, which will allow the company to fund the development cost till the first phase of production.
Based in Houston Texas, Noble Energy is an independent oil and gas exploration and production (E&P) company, having high-grade hydrocarbon assets across the U.S. and several international locations. The company holds a Zacks #4 Rank (short-term Sell).
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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