For Immediate Release
Chicago, IL – November 1, 2010 – Zacks Equity Research highlights Neurocrine Biosciences (NBIX) as the Bull of the Day and Jacobs Engineering (JEC) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Ford (F), Kellogg (K) and Honda Motor Co. (HMC).
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:
With a strong financial position, we believe Neurocrine Biosciences (NBIX) is in an outstanding position to build shareholder value over the next several years.
The company exited the third quarter with $130 million in cash and receivables, with the potential to earn several hundred million more as clinical development progresses. The company's dramatically improved financial position affords management the opportunity to push forward the development of internal pipeline candidates, including VMAT-2, as well as in-license new pre-phase II molecules within the company's core CNS focus.
We recommend accumulating the stock at today's price, up to our $12 target.
Bear of the Day:
We downgrade our recommendation on Jacobs Engineering (JEC) from Neutral to Underperform based on the company's continuous decrease in backlog since the beginning of fiscal 2010, which is expected to negatively affect its top-line results in fiscal 2011.
Hence, we reduce our fiscal 2011 estimate by 3 cents. The stock is cyclical in nature, and thus the sluggish economic environment, which has reduced the client's spending power, was the prime reason for the decrease in backlog.
Large investors fear to infuse capital in the unstable market conditions. Moreover, the company faces immense risk as it operates in a highly-competitive environment.
Latest Posts on the Zacks Analyst Blog:
How We Got to 2.0% Growth in 3
Consumption can be broken down into two main categories: goods and services. Goods can be further broken down into durable goods, which tend to be big-ticket items that will last more than 3 years and non-durable goods, which tend to be consumed right away. (For some reason clothing is categorized as a non-durable good. Clearly the people making these decisions have never looked into my closet.)
Services is by far the biggest part of consumption at 67.15% of PCE and 47.30% of overall GDP. It was the real star of the show this quarter, chipping in 1.15 growth points -- up from just 0.75 points in the second quarter. In the first quarter, services were missing in action, adding just 0.03 growth points. This solid increase is very encouraging. ALIGN="left"> Services tend to be “produced” domestically, not in China, and also tend to be more labor-intensive than goods-producing jobs. Normally demand for services is more stable than demand for goods, especially durable goods.
Within the consumption of goods, consumption of non-durable goods is about twice as large as the consumption of durable goods. However, since people can defer the purchase of a durable good like an auto from Ford (F) more easily than they can defer purchase of a box of corn flakes from Kellogg's (K), durable goods demand is very volatile. As a result, durable goods tend to “punch above their weight” in determining is the economy is booming or slumping.
Durable goods consumption added 0.44 points to growth, down from an addition of 0.49 points in the second quarter and 0.62 points in the first quarter. The downward trend in contributions from durable goods is a bit disconcerting, but is not too bad. The sector is only 10.45% of PCE and 7.36% of overall GDP, yet it contributed 22% of the overall GDP growth in the quarter.
Non-durable goods are 22.4% of PCE and 15.78% of overall GDP. The sectors contribution to growth fell to just 0.20 points in the third quarter from 0.31 points in the second quarter and 0.67 points in the first quarter. I suspect that its growth contribution will rebound a bit in the fourth quarter as demand for non-durable goods tends to be pretty steady and its contribution to growth this quarter was below its overall share of the economy.
Overall, the Consumer is doing his and her part in getting the economy rolling again. Unfortunately as we will see later, too much of that consumption is going to things that are made abroad, and not enough to things made here. The strong contribution from the consumer service sector is encouraging.
Honda Profits More Than Double
Honda Motor Co. (HMC) showed a profit of ¥135.93 billion ($1.62 billion) or ¥75.24 (90 cents) per share in the second quarter of its fiscal 2011, which more than doubled from ¥54.04 billion ($644.81 million) or ¥29.78 (36 cents) per share in the year-ago period (at constant exchange rates).
Consolidated net sales and other operating revenues in the quarter gained 9.5% to ¥2.25 trillion ($26.85 billion) driven by higher revenues in the Automobile segment, offset partially by unfavorable currency translation effects. At constant exchange rates, Honda's revenues increased 14.4%.
Consolidated operating profit increased more than two fold to ¥163.47 billion ($1.95 billion) from ¥65.54 billion ($782.07 million). This was attributable to higher sales volume, favorable product mix, benefits from cost reduction measures, and reduction in costs per vehicle on account of increased production, offset partially by increased research and development expenses and unfavorable currency translation effects.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
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FORD MOTOR CO (F): Free Stock Analysis Report
HONDA MOTOR (HMC): Free Stock Analysis Report
JACOBS ENGIN GR (JEC): Free Stock Analysis Report
KELLOGG CO (K): Free Stock Analysis Report
NEUROCRINE BIOS (NBIX): Free Stock Analysis Report
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