For Immediate Release
Chicago, IL – June 7, 2012 – Zacks Equity Research highlights Marathon Petroleum (MPC) as the Bull of the Day and Itau Unibanco S.A. - ADS (ITUB) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Delta Air Lines Inc. (DAL), The Boeing Co. (BA) and Embraer SA (ERJ).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
We are maintaining our Outperform recommendation on Marathon Petroleum (MPC). Spun out of parent Marathon Oil Co. in 2011, the company is a leading refiner and marketer of petroleum products in the U.S. Our bullish investment theme stems from Marathon Petroleum's scale advantage, impressive asset quality and an extensive midstream/retail network that diversifies its portfolio and provides more stable revenue streams.
We believe management's recently commenced $2 billion share repurchase program and potential formation of a midstream MLP could further boost shareholder value. Marathon Petroleum's low debt ratio and hefty cash balance add to the positive sentiment.
All in all, we believe the company is well positioned going forward and view it as an attractive investment. This is reflected in our continued Outperform recommendation and the $41 price objective, which is based on a multiple of 4.6X trailing twelve-month cash flow.
We are downgrading our recommendation on Itau Unibanco S.A. - ADS (ITUB) to Underperform from Neutral based on the deterioration in its credit quality. The company's first quarter 2012 adjusted earnings were down 5.4% sequentially and 2.6% year over year, reflecting increase in provision expenses from rising default levels.
Though the company's solid business model, diversified product mix, growing service fees, cost controls and expanded credit portfolio are encouraging, we believe that besides asset quality concerns, increasing competition and the stressed conditions in the Brazilian economy pose risks for the company.
Our six-month target price of $13.00 per ADS equates to about 6.9x our earnings estimate for full year 2012. This price target implies an expected negative return of 6.2% over that period, which is consistent with our long-term Underperform recommendation on the ADSs.
Latest Posts on the Zacks Analyst Blog:
Delta Expands in Mexico
The second largest U.S. airline, Delta Air Lines Inc. (DAL) acquired a 4.17% stake in the largest Mexican airline, Grupo Aeromexico, for $65 million.
Under the terms of the deal, Delta received 30.18 million shares of Aeromexico at $31 Mexican pesos per share and became a member of its board. The deal was announced last year in August.
The transaction will expand the networks of both companies between U.S. and Mexico amidst an uncertain economy, threats of a recession looming large over Europe and high fuel prices. Thus, the purchase would create a leading airline alliance in the Mexico-U.S. market.
Together, the companies will offer 93 destinations with 733 daily flights in eight countries through code sharing. In addition, Aeromexico’s fleet that includes The Boeing Co. (BA) 777, 767 and 737, and Embraer SA (ERJ) 145 and 190 will further benefit Delta’s network as the company is replacing smaller gauge inefficient aircraft with more fuel-efficient jets.
Further, Delta and Aeromexico intend to open a new maintenance and overhaul facility in Mexico in the third quarter of 2013.
The deal affirms Delta Air Lines’ continued effort to expand domestic and international flights. Within the country, the company is continuing its effort to strengthen its position in New York City through deeper focus on corporate customers, better airport facilities, and increased services into and out of the region. Additionally, the company has a strong foothold in Latin America, in particular Brazil and Mexico.
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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