Zacks Bull and Bear of the Day Highlights: Tesoro Corporation, Westamerica Bancorp, Time Warner Cable Inc., Comcast Corp and Cablevision Systems Corp
CHICAGO, Nov. 14, 2012 /PRNewswire/ -- Zacks Equity Research highlights Tesoro Corporation (NYSE: TSO) as the Bull of the Day and Westamerica Bancorp (NYSE: WABC) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onTime Warner Cable Inc. (TWC), Comcast Corp. (CMCSA) and Cablevision SystemsCorp (CVC).
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Here is a synopsis of all five stocks:
Buoyed by heightened investor interest and a slew of positive developments, we are maintaining our Outperform recommendation on Tesoro Corporation (TSO). The company's decision to resume its dividend payout (and now increase it), along with the announcement of a $500 million share buyback program, make us optimistic about the independent refiner/marketer.
Our positive stance also revolves around Tesoro's proposed acquisition of BP's Southern California refinery, which would boost refinery capacity and improve the company's operational efficiency. An uptick in crack spreads and Tesoro's scale and diversification benefits afforded by its portfolio of seven refineries add to the positive sentiment.
Overall, we believe Tesoro is well positioned going forward and view it as an attractive investment. Our $45 price target is based on a 2013 P/E multiple of 8.4x.
Westamerica Bancorp's (WABC) third quarter earnings were on par with the Zacks Consensus Estimate. Results were adversely impacted by lower net interest income. We believe that a weak interest rate scenario and low investment returns will restrict any significant bottom-line improvement in the near term.
Westamerica's average interest earnings assets of $4.11 billion in the first nine months of 2012 declined 0.4% from the prior-year period. We don t expect any significant improvement in interest earnings assets in the near term, given the weak interest rates and low investment returns amid the ongoing sluggish economic recovery.
Our six-month target price of $40.00 equates to about 13.6x the Zacks Consensus Estimate for 2012. Combined with the $1.48 per share annual dividend, this price target implies an expected negative total return of 7.6% over that period, which is consistent with our long-term Underperform recommendation on the shares.
Additional content:
Time Warner Cable Innovates Ethernet
Time Warner Cable Inc. (TWC) has initiated a strategy to deliver Ethernet services to its business services customers over the company's existing DOCSIS 3.0 network. Major Cable operators in the U.S. are aggressively deploying high-speed Wideband networks based on DCOSIS 3.0 technology as a cost-effective bandwidth-enhancing solution. The combined DOCSIS 3.0-Ethernet solution sets a target of achieving 320 Mbps downstream and 120 Mbps upstream speed for business enterprises.
In fact, DOCSIS 3.0 is helping the cable MSOs [multi-service operators] to explore some new markets which were hitherto unexplored. The loss in the basic video market are now getting more than recovered in the broadband services segment especially in the high-speed Internet access market. The business services segment is gradually becoming a major source of revenue. In the third quarter of 2012, this segment generated revenue of $493 million, up 27.4% year over year.
Year-to-date revenue of the business services segment was $1,386 million, showing an improvement of 30.8% year over year. We expect this segment to contribute almost $2 billion to the top line of Time Warner Cable in 2012.
Like its closest peers Comcast Corp. (CMCSA) and Cablevision Systems Corp. (CVC), Time Warner Cable continues to lose residential video subscribers year after year. Massive competition from fiber-based TV services of telecom operators and much cheaper online streaming services provided by some companies are the primary reasons for these difficulties regarding cable TV operators.
The deployment of DOCSIS 3.0 becomes essential for cable MSOs since preference for video-on-demand has increased significantly among customers. Another potential future growth area for cable MSOs is the small & medium sized business segment. Various industry researches estimate that the SMB segment is a $30 billion market opportunity.
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