For Immediate Release
Chicago, IL –August 05, 2010 – Zacks Equity Research highlights: MWI Veterinary Supply (MWIV) as the Bull of the Day and Becton, Dickinson (BDX) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Vornado (VNO), Simon Property (SPG) and Jones Lang LaSalle (JLL).
Here is a synopsis of all five stocks:
MWI Veterinary Supply (MWIV) reported third-quarter EPS of $0.74, surpassing the Zacks Consensus Estimate of $0.59 and the year-ago earnings of $0.54. We are pleased to note that based on a strong quarter, the company raised its guidance for 2010.
In spite of a highly fragmented veterinary market, MWI has been able to maintain strong sales growth. The company has witnessed substantial market share gains, encompassing both new as well as existing customers. Through its acquisition of UK-based Centaur Services, MWI is looking to expand its presence in the international market.
Based on the execution skill of the company and strong outlook, we raised estimates for 2010 and 2011. We also upgrade the stock to an Outperform recommendation.
We are downgrading our recommendation on Becton, Dickinson (BDX)to Underperform. We believe the company's disposable and consumable products remain vulnerable to slowdown in hospital, lab-testing and doctor-visit volumes in the U.S. and Europe.
Third-quarter fiscal 2010 earnings of $1.29 per share beat the Zacks Consensus Estimate by $0.04 while falling short of the year-ago earnings. While Becton's focus on safety-engineered products gained momentum in the past (as health-care providers sought to reduce hospital acquired infections), the market is now saturated in the U.S. and slower growth is forecasted for the ex-U.S. markets.
Further, Becton competes with numerous niche players in a multitude of product lines. Our target price of $64 is based on a P/E of 12.6x our fiscal 2010 EPS estimate.
Latest Posts on the Zacks Analyst Blog:
ISM: Services Sector Accelerating
While the Services index does not have as long a history as the Manufacturing index (which used to be called the Purchasing Managers Index or PMI, and goes all the way back to the 1920’s), it covers a much larger part of the nation’s economy. While the overall index for services it still below that of manufacturing, on Monday the Manufacturing index showed a 0.7 point decline (to 55.5), rather than the 0.5 point increase shown on the Services side.
On the other hand, five of the ten sub-indexes declined and only three increased while two were unchanged, while on the Manufacturing side, six were up and four were down. In both surveys, though, nine of the ten sub-indexes were above the magic 50 mark.
Not all of the sub-indexes are of equal importance, however. The most important indicator of what is happening now on the Services side is the Business Activity index, which roughly corresponds to the Production index on the Manufacturing side. It dropped 0.7 points to a still very healthy level of 57.4.
The best indicator of the very immediate short-term future is the Backlog of Orders index, and there, too, the news was not good, as it fell 3.5 points to 52.0. On the other hand, looking just a little bit farther out, the New Orders index becomes the most important indicator, and it rose 2.3 points to 56.7.
Taken together, these three sub-indexes seem to indicate that there was a bit of a short-term pause -- a summer slump, if you will -- in the expansion of the Services side, but that growth will soon pick up again. On the Manufacturing side, all three of these key indexes fell in July, but remain at healthy levels.
With unemployment at 9.5% (for June; we will see what it was for July on Friday) the Employment index takes on additional importance. It gained 1.2 points, and is back above the magic 50 level at 50.9. That is still far below the 58.6 level on the Manufacturing side (which also posted a gain).
On the other hand, in the ADP report this morning on private sector payrolls, the Services side was shown to have gained 63,000 jobs, while 6,000 jobs were lost in Manufacturing. Hopefully the BLS will “settle the dispute” in the favor of the ISM Manufacturing index on Friday.
As with the Manufacturing index, the ISM lists the industries that are showing the most improvement and deterioration for each of the sub-indexes. Surprisingly, the industry that consistently shows up on the “good” side this month is Real Estate, Rental and Leasing. Commercial real estate has been plagued with high vacancy rates and falling values for buildings. This report indicates that things might be taking a turn for the better.
That would be good news for the small and medium sized banks in the country, many of which are heavily exposed to commercial real estate. It would also be a positive indication for many of the big REITs like Vornado (VNO) and Simon Property (SPG), as well as some of the Real Estate management firms like Jones Lang LaSalle (JLL).
Overall, this was a better than expected -- and thus encouraging -- report. However, the news from the key sub-indexes is less positive than that of the overall index. It seems to point to a slow recovery, but a recovery nonetheless, and not that much danger of falling into a double dip. The Services sector is about 8X as large as Manufacturing (but generally more stable) as a share of GDP, so improvements on the Services side of things are very important.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
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BECTON DICKINSO (BDX): Free Stock Analysis Report
JONES LANG LASL (JLL): Free Stock Analysis Report
MWI VET SUPPLY (MWIV): Free Stock Analysis Report
SIMON PROPERTY (SPG): Free Stock Analysis Report
VORNADO RLTY TR (VNO): Free Stock Analysis Report
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