CHICAGO, March 21, 2012 /PRNewswire/ -- Zacks Equity Research highlights U.S. Bancorp (NYSE: USB) as the Bull of the Day and Loews Corporation (NYSE: L) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Motorola Solutions Inc. (NYSE: MSI),Exelon Corporation (NYSE: EXC) and Verizon Wireless (NYSE: VZ).
We are upgrading our recommendation on U.S. Bancorp (NYSE: USB) to Outperform from Neutral based on its solid fundamentals in the midst of a challenging economic environment. The company's fourth-quarter 2011 earnings surpassed the Zacks Consensus Estimate due to growth in revenue and reduced credit costs.
Top-line expansion was supported by increases in both net interest income and fee-based revenue. Its diverse revenue stream, improving credit quality and solid capital levels are impressive.
Though a low interest rate environment and regulatory issues remain our concerns, we believe that the company's loan growth will be encouraging and it will raise dividend and buyback shares following the stress test results.
We have downgraded Loews Corporation (NYSE: L) to Underperform from Neutral on the back of weak fourth quarter results. Operating earnings in the fourth quarter lagged the Zacks Consensus Estimate owing to lower investment income from limited partnership, increase in insurance reserves for its payout annuity business, lower earnings at Diamond Offshore and weak performance of equity investments.
Results at HighMount remained soft due to lower sales volume stemming from lower drilling activity and lower natural gas prices. CNA has substantial exposure to catastrophe losses. Losses in the fourth quarter totaled $208 million, a substantial deterioration from $113 million a year ago.
Our six-month target price of $35.00 per share equates to about 12.1x our 2012 earnings estimate. This price target along with the annual dividend of $0.25 per share implies an expected negative total return of 9.6% over that period.
Motorola Solutions Inc. (NYSE: MSI), one of the leaders in the lucrative U.S. Public Safety market, received a contract worth $22 million from ComEd, an electric supply company and a part of Exelon Corporation (NYSE: EXC).
Motorola Solutions will provide 900 MHz ASTRO 25 digital trunked radio systems, a two-way digital radio transmission system, which offers consistently clear audio service across its footprint. Even if there is any disruption in power supply during heavy storm, the new technology will continue to transmit voice along with important information to ComEd field workers, hence maintaining smooth work-flow.
ComEd, like other utility companies, uses backdated 900 MHz land mobile radio frequency. Therefore, implementation of this new technology by Motorola Solutions will help ComEd to cover an extensive area of 11,400 square miles in northern Illinois, including the city of Chicago. Motorola's XTL and XTS series of digital mobile and portable radios and GTR8000 base station radios will provide support to the new technology for gaining efficiency in delivering high quality voice, data and GPS support.
Motorola's business model remains compelling and we believe the company will be able to maintain its current top-line growth going forward, primarily due to the critical nature of the public safety network in the U.S. and massive growth potential in the Middle East. Furthermore, the company has entered into an agreement with Verizon Wireless (NYSE: VZ) to install a standard-based public safety broadband network for mission-critical operations leveraging on the nationwide LTE network of Verizon, which we believe will act as a positive catalyst for the stock going forward.
Despite these positive traits, we believe that slowdown in the government expenditures due to budgetary pressures, particularly at the state and local level, may significantly jeopardize the company's overall financials as the company is heavily dependent on Government expenditures.
Currently, Motorola Solutions Inc. has a Zacks #2 Rank, implying a short-term Buy rating.
Motorola Solutions Inc., based in Schaumburg, Illinois, is a leading communications equipment manufacturer, with a strong market position in bar code scanning, wireless infrastructure gear, and government communications.
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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