Zacks Bull and Bear of the Day Highlights: Southwest Airlines, NuStar Energy, Mastercard, American Express and JPMorgan Chase
CHICAGO, July 18, 2012 /PRNewswire/ -- Zacks Equity Research highlights Southwest Airlines Co. (NYSE:LUV) as the Bull of the Day and NuStar Energy, LP (NYSE:NS) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onMastercard Inc. (NYSE:MA), American Express Company (NYSE:AXP) and JPMorgan Chase & Co. (NYSE:JPM).
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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 Southwest Airlines Co. (NYSE:LUV) to Outperform based on falling fuel prices and strong growth opportunities. The company reported lower year-over-year earnings in the first quarter but outpaced the Zacks Consensus Estimate. Fuel prices, the major threat to the company's profitability, have dropped, which has made airline operations less expensive.
This lower cost, along with the cost-cutting measures, would offset high maintenance costs associated with the fleet modernization program amid the ongoing market turmoil. Additionally, Southwest is poised to benefit from fleet rightsizing, the Evolve retrofit program, steady capacity growth, All-New Rapid Rewards and several ancillary revenues.
The AirTran merger will also provide additional synergies when integrated with the company's livery, starting this year. Hence, we have an Outperform rating with a target price of $11, based on 13.75x our earnings estimate for 2012.
Following NuStar Energy, LP's (NYSE:NS) grim second quarter interim update, we are recalibrating our investment thesis on the midstream energy partnership to Underperform from Neutral. NuStar recently cautioned investors that losses in its asphalt and fuel marketing segments (which together contribute roughly half of total profits) will adversely impact its results.
Though we welcome the partnership's announcement to sell a 50% stake in its volatile asphalt operations, the non-cash write-down associated with the transaction will be a further drag on NuStar's June quarter EBITDA. We are also concerned by the partnership's high leverage.
Considering these headwinds, we expect NuStar to perform below the industry, which gives investors little reason to hold the stock. This is corroborated by our new Underperform recommendation. Our $48 price objective reflects a 2012 P/E multiple of 19.1x.
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Mastercard Launches New Biz Network
Mastercard Inc. (NYSE:MA) has joined forces with Rearden Commerce, provider of various business and customer solutions, to offer a brand new personalized website by deploying the latter's Deem commerce platform. The newly launched website dubbed "MasterCard Business Network" will enable the smooth facilitation of operations by small and medium-sized businesses as well as aid them to streamline their expenses.
All cardholders can visit the website which has been designed to facilitate customers by helping them systematically plan their business operations. Also, it offers discounts on purchases and management expenses. Users can also manage their hotel bookings and travel policies from the website.
Currently, the beta version of the website is available and is expected to be upgraded in a few weeks time. The new version will have enhanced features and functions that will help Mastercard users better manage their financials.
The company plans to expand its services for customers by providing better accessibility to applications which can be downloaded on the individual's smartphones. This will empower the users with mobility to access the Mastercard Business Network whenever required.
Other users of Deem include one of Mastercard's closest competitors – American Express, a unit of American Express Company (NYSE:AXP). JPMorgan Chase, an operating unit of JPMorgan Chase & Co. (NYSE:JPM), is also among the 40 companies that have deployed the Deem platform in its systems.
Mastercard continues to diversify its product portfolio through innovations that include e-commerce, mobile payments (m-commerce), prepaid cards, smart cards and various value-added services to realign itself to capitalize on the most promising growth opportunities from both geographic and product development standpoints. It is focused on the needs of its customers and continues to add value amid a challenging economic environment through its array of products that are user-friendly and flexible.
Mastercard currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We retain our long-term Neutral recommendation on its shares.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
About the Bull and Bear of the Day
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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