The Zacks Analyst Blog Highlights: Ford Motor, Honda Motor, Volkswagen, Toyota Motor and Henry Schein

Zacks

For Immediate Release
 
Chicago, IL – November 29, 2013 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Ford Motor Co. (F-Free Report), Honda Motor Co., Ltd. (HMC-Free Report), Volkswagen AG (VLKAY-Free Report), Toyota Motor Corp. (TM-Free Report) and Henry Schein, Inc. (HSIC-Free Report).
 
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Here are highlights from Wednesday’s Analyst Blog:

Ford Recalls Escape for Seventh Time
 
Ford Motor Co. (F-Free Report) announced two recalls of its popular sports utility vehicle (:SUV) Escape of the model year 2013. With these two recalls, the automaker’s total number of recalls of Escape increases to seven since the vehicle was redesigned and marketed in the spring of 2012.
 
The first recall announced yesterday covers 161,334 Escape SUVs globally. Of these, 139,228 vehicles are in the U.S. market, 18,917 in Canada and the remaining in other markets. Ford is recalling the SUVs to fix oil leaks that may lead to fire.
 
The 2013 version of Ford’s Escape is equipped with 1.6-liter engines. The compny is recalling the vehicles as the engine cylinder head may crack due to overheating and thereby result in leakage of oil. This may eventually lead to fire.
 
Ford will alter the engine shielding, cooling and control systems under the recall. Ford said that it is aware of 13 incidents of fire due to this problem, but there is no report of any injury.
 
The next recall covers 11,821 Escape vehicles, which are included in the above-mentioned recall as well. Of these vehicles, 9,469 vehicles are in the U.S.
 
Ford announced the second recall due to the improper installation of the engine compartment fuel line during a prior recall. This also may lead to oil leakage. Under this recall, Ford will examine the engine compartment fuel line and replace it if required. The owners will be informed about both the recall by Jan 23, 2014.
 
In addition, Ford is recalling 7,329 Lincoln MKZ hybrid vehicles of the model years 2013 and 2014 globally. The recall is being made to reprogram the powertrain control module. The existing module is unable to meet the U.S. regulatory requirement that the brake needs to be depressed before the car can be shifted out of parking.
 
In Jul 2012, Ford had recalled 11,500 Escape SUVs to fix a problem that may have led to engine fire. In the same month, the automaker recalled 8,266 Escapes due to a carpeting issue, which could reduce clearance for the brake pedal.
 
These recalls were followed by one in Sep 2012, in which Ford recalled 7,600 2013 Escape SUVs to fix problems that could have caused fire. Two months later, 73,300 Escapes were recalled to fix a software glitch in the cooling system, which had the possibility of causing fire.
 
Moreover, Ford had to pay a penalty of $17.4 million to the U.S. regulators in Jul 2013 for not recalling about 424,000 Escape vehicles of the model years 2001 to 2004. This is the biggest penalty that can be imposed by the National Highway Traffic Safety Administration (:NHTSA).
 
Escape is the second best selling vehicle of Ford in the U.S. after the F-Series pickup trucks. Escape sales went up 14% to 250,543 vehicles in the first ten months of 2013. It provides tough competition to Honda Motor Co., Ltd.’s (HMC-Free Report) CR-V in the SUV segment.
 
Not only Ford, other automakers are also recalling vehicles for several reasons. Recently, Volkswagen AG (VLKAY-Free Report) recalled 2.64 million vehicles across the globe to fix some drive system and electronic problems. Volkswagen was followed by Toyota Motor Corp. (TM-Free Report), as the latter recalled 33,000 cars, pickup trucks and commercial vehicles globally to fix a problem related to the engine.
 
Henry Schein Buys 60% Stake in BioHorizon
 
In continuity of its strategic investment plans, Henry Schein, Inc. (HSIC-Free Report) recently announced the acquisition of a 60% stake in BioHorizons, a U.S based manufacturer of advanced dental implants with sales of $115 million. However, the financial terms of the agreement remain undisclosed.
 
Post the takeover, BioHorizons will continue to operate as an independent company. The transaction involves a two-step process: a recapitalization through which Henry Schein will lend approximately $145 million to BioHorizons to fund distribution to shareholders, which will occur prior to the deal’s closure, followed by the equity investment.
 
The transaction is expected to be sealed by the end of the year, subject to regulatory approval. Henry Schein expects the acquisition to be dilutive to its earnings per share by 3–5 cents in 2014 and accretive by 3–4 cents in 2015.
 
The acquisition of BioHorizon marks Henry Schein’s entry into the global implant market, which is estimated to touch $4.2 billion by 2016. Combined together, the U.S and Canadian markets alone reveal a potential of $1.5 billion in 2016, up from $1 billiion in 2012.

Foreseeing the opportunities in the implant market, Henry Schein has also made investments in CAMLOG Biotechnologies AG, a leading manufacturer of implants in Europe.
 
As the Dental business of Henry Schein contributes a major portion of revenues, the company wants to expand this business through strategic investments like BioHorizon and others.
 
The current demographic tailwinds, greater consumer awareness and high success rates in implant procedures are some of the few drivers noticed in the implant market. Modern-day digitization in dental implants also supports performance of the sector participants by increasing patient comfort and enhancing their overall dental experience.

One of the largest provider of health care products and services to office-based dental, animal health and medical practitioners, Henry Schein expects that such strategic investments will eventually fortify its foothold in two of the largest implants markets, namely the U.S and Germany.

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