CHICAGO, Sept. 8, 2011 /PRNewswire/ -- Zacks Equity
Research highlights Motorola Solutions, Inc. (NYSE: MSI) as
the Bull of the Day and China Life Insurance (NYSE: LFC) as
the Bear of the Day. In addition, Zacks Equity Research provides
analysis Yahoo (Nasdaq: YHOO), LinkedIn (NYSE: LNKD)
and Zillow (Nasdaq: Z).
(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)
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 upgrade our recommendation on Motorola Solutions, Inc.
(NYSE: MSI) to Outperform. The company reported excellent financial
results for the second quarter of 2011. The company is a market
leader in the lucrative U.S. Public Safety market. While the
federal budgetary pressures are anticipated to continue, the state
and local level agencies have become a major growth driver for
Motorola Solutions.
The company's business model remains compelling and we believe
the company will be able to maintain its current top-line growth in
the future primarily due to the critical nature of the public
safety network in the U.S. and massive growth potential in the
Middle East. Furthermore, Motorola
Solutions boasts a healthy cash flow.
The company has also enhanced its shareholders value through a
regular dividend policy and the initiation of a major share buyback
program. We therefore, have upgraded our rating to Outperform with
a target price of $49, based on 22x
our fiscal 2011 earnings estimate, approaching the industry
average.
Bear of the Day:
We are initiating coverage on China Life Insurance (NYSE:
LFC) with an Underperform recommendation. The company's semi-annual
earnings witnessed a steep decline from the comparable period of
the prior year. Increases in revenue and premiums were offset by
increased benefits, claims and expenses, which led to a decline in
the net income.
Even the capital position remains sluggish driven by reduced
operating cash flows in the semi-annual period. The company needs
to improve premium earned from the short-term insurance business as
well as cash from operations. Overall, we expect some downside in
the near-term due to lack of any significant growth catalyst.
Our six-month target price of $32.00 equates to 15.2x our earnings estimate for
2011. Combined with the $0.81 per ADR
annual dividend, this target price implies an expected negative
total return of 7.4% over that period.
Latest Posts on the Zacks Analyst Blog:
Can Washington Deliver?
With the economic calendar relatively on the thin side in this
holiday-shortened week, the market is keenly waiting for the two
speeches from Washington this
Thursday -- the first by Fed Chair Ben
Bernanke and the second by the President Obama, focused on
the labor market. Given the relatively low expectations,
particularly from the president, there is room for positive
surprise.
Reports in the media indicate that the president plans to
announce a roughly $300 billion
program that will include a mix of tax incentives and spending
through an infrastructure bank. On the tax front, the president
will likely ask for an extension of the payroll-tax holiday that
expires at the end of this year. Another tax measure could be a
job-centric tax credit for employers. Another idea floating around
is to offer a temporary holiday for repatriation of corporate cash
parked overseas at present. Given the anti-spending mood in
Congress, the president is expected to suggest paying for these
upfront outlays with cuts in the outer years.
There is a lot less ambiguity about what the Fed could or should
do in response to the recent run of soft economic reports. The
minutes of the last FOMC meeting provides plenty of evidence that
the committee has considered further easing as a viable policy
option. However, given dissensions within the FOMC, the Fed is
unlikely to announce a new bond purchase program along the lines of
the last quantitative easing program.
A more viable alternative appears to be the repositioning of the
Fed's bond portfolio towards longer-maturity bonds. This would
involve using proceeds from maturing bonds, obviating the need for
increasing the size of the Fed balance sheet. The goal will be to
trigger a mortgage refinancing cycle by bringing down long-term
interest rates.
With yields on 10-year Treasuries at the under-2% record level
and a big chunk of current mortgages under water, it is far from
certain that this move will have the desired effect. But given the
pressure 'to do something,' Bernanke may tip his hand on this front
in his Thursday speech.
In corporate news, Yahoo (Nasdaq: YHOO) announced that
its board had removed CEO Carol
Bartz and replaced her with the current CFO Tim Morse as the interim CEO. Given the lack of
leadership from the departing CEO, investors are likely to cheer
her departure. In other news, Groupon Inc., the daily deals site,
is reportedly rethinking the timing of its IPO. The company had
originally planned to go public after Labor
Day, with a road show planned for next week.
Internet IPOs have been all the rage this year, though
enthusiasm appears to be ebbing lately following the recent market
turmoil. LinkedIn (NYSE: LNKD), the social and professional
networking site, and Zillow (Nasdaq: Z), the real estate
site, had earlier completed very successful IPOs.
The policy response from Washington may help on the margin, but there
are no silver bullets here. The problems facing the U.S. economy
are more structural and long-term in nature and generally outside
the purview of the Fed. In the absence of cooperative and creative
leadership from the executive and legislative branches, it is
difficult to envision anything substantial at this stage. This is
particularly so after what we saw in the debt-ceiling debate.
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
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