Foods, Quinenco and HMS Holdings
CHICAGO--(BUSINESS WIRE)--November 07, 2006
Zacks Equity Research highlights Sinopec (NYSE:SNP) as the Bull of
the Day and Whole Foods Market (Nasdaq:WFMI) as the Bear of the Day.
In addition, Zacks Equity Research provides analysis on Quinenco
(NYSE:LQ) and HMS Holdings (Nasdaq:HMSY). Full analysis of all four
stocks is available at http://at.zacks.com/?id=2676.
Here is a synopsis of all four stocks:
Bull of the Day:
Our Bull of the Day recommendation is for China Petroleum &
Chemical, or Sinopec (NYSE:SNP). Sinopec recently reported strong
financial results for the third quarter of 2006, due to increased
production and high crude oil prices. While a number of uncertainties
remain, we believe that the near- to medium-term environment supports
its continued upstream production growth and downstream capacity
expansion. Moreover, Sinopec's integrated petrochemical and refining
businesses are expected to benefit from possible price reform for
refined products in China. Therefore, we are maintaining our Buy
recommendation for Sinopec.
Bear of the Day:
Our Bear of the Day recommendation is for Whole Foods Market
(Nasdaq:WFMI). We are downgrading WFMI shares from Buy to Sell. Whole
Foods reported in-line fourth quarter results, but management
surprised investors by forecasting slower growth rates beginning in
fiscal year 2007. WFMI shares sold off over 20% in after-hours trading
on the news. Unfortunately, we think there is further downside ahead
for the stock, which is still trading at over 31 times fiscal year
2007 EPS estimate. With WFMI's growth declining, growth and momentum
investors are selling the stock. Meanwhile, the stock is too expensive
for value investors to step in and buy. As a result, we believe the
stock will slide down to $30, or about 20 times our fiscal year 2007
We are keeping our Buy recommendation on Quinenco (NYSE:LQ). Our
economic outlook for Latin America, particularly in Chile and Brazil,
remains positive, and the company's results in the first nine months
of 2006 were positive. We are particularly impressed by the strong
performance of Quinenco's manufacturing segment, which we believe will
continue to outperform in future months. The Argentine inflation rate
and disappointing results for Quinenco's telecommunication business
remain a concern, but do not change our positive view on the company's
short-term outlook. Our six-month target price has increased from
$14.00 to $15.75.
HMS Holdings (Nasdaq:HMSY), a market leader in the revenue
recovery and cost containment of government healthcare programs, has
just acquired its only rival. With little customer overlap and
complementary services, the merger should be beneficial to the
company. HMS is expected to realize savings in overhead. This and
higher gross margins from minimal competition should lessen the impact
of additional interest costs. The impact on sales and earnings for
2006 will be modest because of the timing and cost of the transaction.
The company should post dramatic gains for 2007. Sales and earnings
are expected to grow by 50%. A one-year target price of $18.00 is
Get the full analysis of all four stocks by going to
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