For Immediate Release
Chicago, IL – July 20, 2012 – Zacks Equity Research highlights Raytheon Company (RTN) as the Bull of the Day and SM Energy Company (SM) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Computer Sciences Corporation (CSC), Accenture plc. (ACN) and Hewlett-Packard Company (HPQ).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
We have upgraded our recommendation on Raytheon Company (RTN) to Outperform from Neutral, as we believe the company will fare better among the large-cap defense players in the face of downward defense budget trends and the incoming effect of sequestration. Our bullishness comes from its nonplatform-centric focus, rising international sales and substantial presence in the domestic classified market.
Looking forward, Raytheon enjoys strong order bookings and order backlog, an improving balance sheet, growing cash flow, and steady operational improvements. Future growth will be driven by its focus in the areas of Intelligence, Surveillance and Reconnaissance; air & missile defense systems; border security; air traffic management; training & homeland security; and cyber security.
We feel the discounted valuation of the company is unjustified, owing to its non-platform-centric focus, rising international sales, substantial presence in the classified market, strong order bookings and order backlog, strong cash flow generation and its focus on shareholder value. Our $67.00 target price is based on P/E multiple of 12.9x 2012 EPS.
We are downgrading our recommendation for SM Energy Company (SM) to Underperform from Neutral. The company's holding in the non-core region of the Williston Basin will lag the output of its peers with acreage in the core region of the Basin.
Moreover, midstream disruptions in the Bakken and the Permian hindered output in April 2012, and are likely to put pressure on the company's output guidance. Other risks that could potentially impact the company's operations include a lack of service rig availability, dry holes, mechanical failures and adverse weather conditions.
Hence, we have downgraded our recommendation to Underperform from Neutral. Our $43 price objective reflects a multiple of 3.8x the trailing the 12-month cash flow.
Latest Posts on the Zacks Analyst Blog:
CSC Offers Insurance Solution
Computer Sciences Corporation (CSC) recently came up with a new product targeted at insurance companies. The new insurance business process from CSC helps speed up the payments of death benefits and is useful to locate beneficiaries for death claims.
This solution from CSC identifies the potential claims by searching the Social Security Death Master File (DMF) and other such databases. The validation process also includes the insured’s identity and policy coverage, executes the settlement of claims and searches for beneficiaries and claim payment recommendations and also helps in generating all search details.
This insurance business process offers tools required at the professional level, enhancing the quality of service in a cost-effective manner. Moreover, CSC’s team of claim examiners has the ability to execute the entire cycle of search and settlement of claims, or any portion thereof, depending on the insurer’s needs, and evaluated on the basis of the transaction.
Although CSC is taking necessary steps to come up with innovative solutions to improve its business volume and enhance its customer base, finding the right customers for the solution becomes difficult, as the insurance sector is in the doldrums.
While restructuring, cost-saving and new contract wins are some of the ways in which the company is trying to increase its business volume, the delay in new order renewals from the government vertical and deterioration in European economic activity are some of the factors that concern us.
Intense competition in the IT and cloud-computing space from both small and big players such as Accenture plc. (ACN) and Hewlett-Packard Company (HPQ), CSC’s large European exposure, strained federal budgets and delayed approval of government contracts are other factors weighing on the stock in the short term.
Currently, CSC holds a Zacks #5 Rank (implying a short-term Strong-Sell rating).
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.
About the Analyst Blog
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.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment
Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=4582.
Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Zacks Investment Research
800-767-3771 ext. 9339
More From Zacks.com