For Immediate Release
Chicago, IL – September 21, 2010 – Zacks Equity Research highlights: NiSource (NI) as the Bull of the Day and McDermott International (MDR
Full analysis of all these stocks is available at http://at.zacks.com/?id=5506.
Here is a synopsis of all five stocks:
Bull of the Day:
We have upgraded our recommendation for NiSource (NI) to Outperform, as we believe the recent equity issue removes a key apprehension on the stock. The issue makes way for the company to reach its $1 billion investment target while comfortably meeting its long-term 3%-5% EPS growth target.
NiSource's strategy of divesting its non-core businesses and transforming into a pure-play regulated company bodes well in our view. The company has improved its balance sheet and maintained its investment grade credit ratings in the past year.
We believe income-seeking investors will find the company's current dividend yield of 5.4% attractive. Our target price of $20.00 is based on the 2011 P/E multiple of 15.5x.
Bear of the Day:
We are downgrading McDermott International (MDR
Near-term bookings remain lumpy at McDermott, as the current uncertain environment has adversely affected the economics of building new oil and gas infrastructure. Additionally, the transfer of the power generation and government operations has left McDermott with a less diversified business, thereby heightening its risk profile.
These factors are reflected in our downgrade of the company's shares to Underperform from Neutral. Our $12 price objective reflects 2010 P/E multiple of 10.4x.
Latest Posts on the Zacks Analyst Blog:
BP Seals Macondo Well Permanently
BP plc (BP) has finally plugged the Macondo well. This announcement came yesterday after $9.5 billion (through September 17) in expenditures and five months of continuous effort.
Tony Hayward, the outgoing chief executive officer of BP group, termed this as a significant milestone in response to the Deepwater Horizon tragedy. He said this well no longer presents a threat to the Gulf of Mexico.
Though the well is now completely sealed, BP still has a lot of cleanup work to be completed in the coming days. In addition, the spill cost the company hundreds of lawsuits that could be distractions for years.
We are also concerned about the company's future exposure on the U.S. offshore business as the House of Representatives might prevent BP from obtaining future offshore drilling leases. Under such a situation, BP's overall operation will be significantly hampered as the company has nearly doubled its output from the U.S., which now accounts for an approximately 27% of the group's total production.
Earlier this month, BP released its internal investigation report on the Deepwater Horizon explosion. Apart from blaming itself for the accident, the company also holds others such as rig owner Transocean Ltd. (RIG) and cement contractor Halliburton Co. (HAL) responsible.
The distressed U.K. major has experienced the worst times in its history following this accident. Its market value was halved within two months and its dividend was also suspended. BP had reported a $17 billion loss in the second quarter, one of the biggest in the U.K. corporate history.
The oil leak was stopped in mid-July, but the effect of this news had no material impact on the stock performance as the price remained essentially flat over this period. It now remains to be seen how the stock performs over the coming days following this good news. Until then, we prefer to stay on sidelines and maintain our Neutral recommendation with the Zacks #3 Rank (Hold).
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
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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BP PLC (BP): Free Stock Analysis Report
HALLIBURTON CO (HAL): Free Stock Analysis Report
MCDERMOTT INTL (MDR): Free Stock Analysis Report
NISOURCE INC (NI): Free Stock Analysis Report
TRANSOCEAN LTD (RIG): Free Stock Analysis Report
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