CHICAGO, March 14, 2011 /PRNewswire/ -- Zacks Equity
Research highlights: WPP Group, Plc - ADS (Nasdaq:
WPPGY) as the Bull of the Day and Avon Products (NYSE:
AVP) as the Bear of the Day. In addition, Zacks Equity Research
provides analysis on American International Group
Inc. (NYSE: AIG), MetLife Inc. (NYSE: MET) and
Boeing Co. (NYSE: BA).
(Logo:
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Full analysis of all these stocks is available at
http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Bull of the Day:
WPP Group, Plc - ADS (Nasdaq: WPPGY) is focused on
new markets, new media and consumer insights. As WPP has a dominant
market share in many areas, we believe it has the pricing power to
improve margins and sustain future growth in profit.
WPP Group continues to be in a good position to benefit from the
key industry trends. The TNS acquisition represents a major
competitive advantage for its consumer insight business and the
group. Its gross synergies from the acquisition in the fiscal year
2010 were approximately GBP60
million, versus original commitment of GBP52 million.
Encouraging results in fiscal year 2010 with a top-line increase
of 7% and net earnings improvement of 28%, together with
management's guidance are all very positive. Thus, we maintain our
Outperform recommendation on the ADS.
Bear of the Day:
We have downgraded our long-term recommendation on Avon
Products (NYSE: AVP) to Underperform following the weak
quarterly performance in the fourth quarter of 2010. The quarterly
earnings of $0.59 per share fell
short of the Zacks Consensus Estimate of $0.67 and dipped 13.2% from the year-ago quarter,
battered by increased product costs.
The North American market remained sluggish throughout fiscal
2010. Moreover, the company's initiatives to change the product mix
and reposition the business in the U.S. market will require
significant expenditure to support increased advertising and
promotional activities, which may dent its margins.
Furthermore, Avon is highly
leveraged, which limits its financial flexibility for future
growth. Additionally, the company faces stiff competition from
other established players and has significant exposure to foreign
currency translations.
Latest Posts on the Zacks Analyst Blog:
AIG Set to Buy Back RMBS
American International Group Inc. (NYSE: AIG) took
another step to liberate itself from the government debt by
offering cash repayment of the $15.7
billion outstanding loan on Maiden II, which is a
special-purpose investment vehicle comprising residential
mortgage-backed securities (RMBS), thereby helping the US
government to earn about $1.5 billion
from the company's bailout loan.
Accordingly, AIG has offered repurchase about 800 RMBS at about
50 cents on the dollar. The company
is expected to use the cash generated from its insurance operations
in order to buy back the RMBS. When AIG was formed in December 2008, it had about $20.5 billion of RMBS under Maiden II, which has
now declined to $15.9
billion.
Earlier this week, AIG also repaid a $6.9
billion loan to the government from the proceeds of ALICO
sale to MetLife Inc. (NYSE: MET). The repayment of
Maiden II loan will further reduce AIG's loan obligations toward
the US government to about $26
billion from about $39 billion
at 2010 end and the initial debt chunk of about $182 billion in 2008. This appears to be quite an
impressive progress.
The government's $26 billion
comprises preferred interests in AIA Group worth $11.3 billion held by the Treasury, a different
Maiden Lane III vehicle that holds interests in collateralized debt
obligations, and an undrawn line of credit.
As for AIG, the RMBS have improved with the current economic
revival and hence, the buy back at this point would prove to be a
lucrative investment. Besides, the debt repayment can help ease the
process of public offering of 92% stake of Treasury in AIG, which
is expected by May this year.
AIG's ongoing capital restructuring process over the past
several quarters has started showing positive results. While asset
disposals and repayment of a chunk of debt increase operating
efficiencies, the execution of the recapitalization program also
appears favorable for the book value growth. We expect the company
to benefit from its scale of operations with a recovery of the
economy in 2011 and beyond.
Meanwhile, most of AIG's core businesses are also showing up
given the unique operational focus and management discipline. While
SunAmerica helped in the modest growth of assets under management
during the fourth quarter of 2010, losses at ILFC are also waning
and aiding in the expansion of its aircraft portfolio through the
recent order of 33 737-800 jets from Boeing
Co. (NYSE: BA), worth $2.6
billion at list prices.
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.
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