Zacks Equity Research highlights Tesoro Corp. (NYSE: TSO) as the Bull of the Day and Atmel Corp. (Nasdaq: ATML) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Snap-on, Inc. (NYSE: SNA) and Abbott Laboratories (NYSE: ABT). Full analysis of all four stocks is available at http://at.zacks.com/?id=2676.
Here is a synopsis of all four stocks:
Bull of the Day:
Our Bull of the Day recommendation is for Tesoro Corp. (NYSE: TSO). Our recommendation remains unchanged, though we have raised our estimates and price objective and given effect to the recent 2-for-1 stock split. We continue to like Tesoro for its strong portfolio of West Coast-focused refining assets, which has been further strengthened by the recent accretive acquisition of Shell’s Wilmington refinery. The unit’s integration process is on track and the company remains confident in its target of $100 million in synergies. Tesoro plans to eventually increase the unit’s capacity through investments over the next few years.
Bear of the Day:
Our Bear of the Day recommendation is for Atmel Corp. (Nasdaq: ATML). On June 27, Atmel announced its full results for Q1 and filed its Form 10-Q. The company is now current with the SEC. In Q1 revenue came to $391.3 million, down 2% year over year. On a GAAP basis, net income totaled $28.9 million or $0.06 per share, compared to net income of $4.7 million or $0.01 per share in the year-ago period. On a pro forma basis, net income came to $12.4 million or $0.03 per share, compared with breakeven in the year-ago quarter. For Q2 of 2007, Atmel expects revenue to be up 1% to 4% sequentially. Still we are maintaining our Sell rating and target price of $4.75, which reflects our concern over pricing pressures in its memory and ASIC businesses.
Analyst Blog:
Having reported upside earnings surprises for five consecutive quarters, earnings momentum investors have bid Snap-on, Inc. (NYSE: SNA) up beyond historical valuation levels. Management has successfully delivered more predictable and consistent financial performance through the implementation of the Driven to Deliver and Rapid Continuous Improvement programs. However, despite the progress being made on the cost savings initiatives and last five positive quarterly earnings reports, the current high valuation compels us to rate the stock a Hold. Over the last ten years, Snap-on's stock has traded in a P/E [price-to-earnings multiple] range of 12 to 25. With the stock currently at the uppermost part of this range, the stock is extended and is vulnerable to any earnings shortfall.
Abbott Laboratories (NYSE: ABT) discovers, develops, manufactures and sells a diversified line of healthcare products. We expect a sizable pick-up in earnings growth rate over the next few years driven by strong sales of its lead product Humira, a rapidly growing vascular business, and on several new drug applications recently filed with the FDA. Based on our model, the company is expected to deliver double-digit growth from 2007 through 2010. We believe ABT possesses a low risk profile and will continue to trade at an industry premium. Accordingly, we continue to rate the shares a Buy with a price target of $66. Abbott currently trades at 19.3x our 2007 EPS [earnings per share] estimate of $2.78. Not cheap on first glance, but very intriguing based on the long-term growth rate.
Get the full analysis of all four 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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Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.
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