Zacks Bull and Bear of the Day Highlights: The Cooper Companies, Capella Education, Toyota Motor, Honda Motor and Nissan Motor

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Mar 16, 2011, 09:30 ET

CHICAGO, March 16, 2011 /PRNewswire/ -- Zacks Equity Research highlights: The Cooper Companies (NYSE: COO) as the Bull of the Day and Capella Education (Nasdaq: CPLA) as the Bear of the Day. In addition, Zacks Equity Research provides analysis Toyota Motor Corp. (NYSE: TM), Honda Motor Co. (NYSE: HMC) and Nissan Motor Co. (Nasdaq: NSANY).

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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:

Bull of the Day:

We reaffirm our Outperform rating on The Cooper Companies (NYSE: COO) following its healthy first-quarter fiscal 2011 results and management's buoyant outlook. Earnings for the quarter outshined the Zacks Consensus Estimate while profit roughly doubled year over year, powered by healthy growth across the board.

Cooper proves to be a turnaround story based on rationalization of plants, successful product launches and better execution. Also, the industry outlook has improved with an expectation of lower drop-out rates and a higher proportion of sales of value-added lenses. Within the industry, Cooper remains a leader in toric lenses.

The company has strengthened its balance sheet by reducing debt with improved free cash flows. We issue a price target of $82 based on a P/E of 21.1x our fiscal 2011 EPS estimate.

Bear of the Day:

Capella Education's (Nasdaq: CPLA) fourth-quarter 2010 earnings missed the Zacks Consensus Estimate, but grew 23.9% from the year-ago quarter. Total revenue also rose 21.3% during the quarter.

However, a slowdown in student enrollment was witnessed in the quarter. After increasing 25.7% in third-quarter 2010, the rate of growth in enrollment dropped sharply to 16.2% in the fourth quarter. This led Capella to forecast a 4.5% to 6.5% rise in total enrollment and an 8.5% to 9.5% growth in the top line in first-quarter 2011.

The regulations proposed by the Department of Education are weighing upon student enrollment. New enrollment fell 10.7% during the quarter. Capella cautioned that new enrollment in first-quarter 2011 is expected to tumble 35%. Consequently, we have an Underperform rating on the stock.

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Japan Quake: World Auto Trembles?

The recent earthquake and tsunami in Japan that killed thousands and left many people homeless has become one of the additional factors that leads to economic disruptions besides the rising oil prices, inflationary pressure as well as repercussions from the global economic crisis in late 2008 and its slow recovery. The companies are shutting down plants due to their indeterminate damage, power shortages and inaccessible roads and ports.

The global automotive industry is bound to be affected by the natural disaster as it highly depends on the country for imports of both vehicles and their spare parts. Japan accounts for about 13% of the worldwide automobile production with U.S. being its largest market.

However, global auto sales may not drop right away until March-end or April. This is because U.S. dealer networks hold at least a 30-day supply for most of the cars.

Impact on U.S. and Europe

The automakers in Japan have less market penetration in Europe than in North America, as revealed by Jeff Schuster, the global forecasting director of J.D. Power and Associates. As a result, the automotive market in Europe would be much more affected by the production shutdowns compared with North America as the former has fewer manufacturing bases than the latter, implying large number of vehicle imports from Japan.

Meanwhile, surging gasoline prices raised demand for fuel efficient and smaller vehicles in the U.S. Last week, gasoline prices reached $3.57 per gallon, up 75 cents from the average price in 2010.

However, most of the sought-after fuel-efficient vehicles in the U.S. are produced entirely in Japan; even though Japanese automakers such as Toyota Motor Corp. (NYSE: TM), Honda Motor Co. (NYSE: HMC) and Nissan Motor Co. (Nasdaq: NSANY) have their manufacturing bases in the U.S. As a result, supply of popular lineups including Toyota Prius hybrid, Toyota Yaris and Honda Fit would be endangered in the near term, leading to price hike.

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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