Liberty Property Trust, Marsh & McLennan, Energizer Holdings and Smith & Nephew
CHICAGO--(BUSINESS WIRE)--May 01, 2008
Zacks Equity Research highlights Coca-Cola FEMSA (NYSE: KOF) as
the Bull of the Day and Liberty Property Trust (NYSE: LRY) as the Bear
of the Day. In addition, Zacks Equity Research provides analysis on
Marsh & McLennan (NYSE: MMC)), Energizer Holdings, Inc. (NYSE: ENR)
and Smith & Nephew (NYSE: SNN). Full analysis of all these stocks is
available at http://at.zacks.com/?id=2676.
Here is a synopsis of all five stocks:
Bull of the Day: Coca-Cola FEMSA (NYSE: KOF)
We are keeping our Buy recommendation on Coca-Cola FEMSA S.A. de
C.V. The company posted better-than-expected results for the second,
third and fourth quarters of 2007. The results in South America were
particularly impressive and Mexican results showed a considerable
improvement after some difficult quarters. Additionally, the
short-term outlook for Latin American economic growth remains
positive, despite the difficult economic environment in the U.S. and
its effects on Mexico.
The company also benefited from the strength of most Latin
American currencies, a trend that should prevail in the following
quarters. Finally, KOF has been reducing net debt, a necessary step to
reduce financial costs and increase confidence.
Bear of the Day: Liberty Property Trust (NYSE: LRY)
LRY reported 1Q08 FFO of $0.80 per share, $0.01 above our
estimates and consensus. Operations including are holding up
relatively well in the company's core portfolio although overall
vacancies are increasing. The company has an attractive yield, now
over 7%, although the dividend is barely being covered with operating
cash. We expect rental rates to remain flat through 2008, as the
company has assets in office markets that have high vacancies.
Office and industrial markets are weakening throughout the US due
to a faltering economy. Liberty has a large development pipeline that
is only mildly pre-leased, and poses risk should the economy continue
to soften in 2008.
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Marsh & McLennan (NYSE: MMC)
Marsh & McLennan plans to release its 1Q08 earnings results on May
7, 2008 with a conference call scheduled for the same morning. 4Q07
operating earnings from continuing operations came in at $0.26 per
share, compared to $0.39 per share in the prior-year quarter. While
the consulting business continues to exhibit strong performance, the
overall results have been affected in the recent quarters by the
ongoing poor performance in the insurance broking business.
While we are optimistic about initiatives being taken by the new
Management team, we do not anticipate any significant improvement
anytime soon, due to the current pricing environment. Ahead of 1Q08
earnings release, we are slightly moderating our estimates for FY08
and FY09 and setting our six-month target at $30.00 per share. We are
maintaining our Hold rating on the shares of MMC at current valuation.
Energizer Holdings, Inc. (NYSE: ENR)
Energizer Holdings is experiencing top-line growth both through
organic growth in the razor blade and battery businesses, and through
the acquisition of Playtex. In order to complete the Playtex
acquisition and refinance existing Playtex debt, Energizer's debt
level significantly increased, which could impair the company's
financial condition. At the end of calendar 2007, long-term debt stood
at $2.69 billion versus $1.37 billion in the year-ago period.
The balance sheet is highly leveraged with debt being 77% of total
capitalization. With the Playtex acquisition, debt rose above the
critical 3.5 times cash flow level, which required (by debt covenant)
a 75 basis point interest rate penalty. Energizer does not pay a
dividend. Therefore, the share repurchase program has been curtailed
as management concentrates in lowering the debt level. Guidance for
integration savings, originally estimated to be $57 million, has been
raised to $70 million.
Smith & Nephew (NYSE: SNN)
We are maintaining a Hold recommendation on Smith & Nephew, PLC
prior to the first quarter results due on May 1. The company is
benefiting from its Earnings Improvement Program (EIP) and the recent
stock buy-back should provide support to the stock. SNN reported Q4
and full year results.
For the full year, revenue of $3.4 billion, up 10% on a comparable
basis with trading profit at $706 million up 17%. As a result of the
company's Earnings Improvement Program, there was over 1% operating
SNN's Orthopaedic Reconstruction revenue growth of 13% leads the
market for the 5th consecutive year with Orthopaedic Trauma and
Clinical Therapies revenues up 13% as the company's EXOGEN Ultrasound
Bone Healing System outpaces the market. In Endoscopy, due to
investments made outside the US, revenues were up 10%. In Advanced
Wound Management, trading margin was up 120 basis points as a result
of the restructuring of this division. The EPS increased 15% to 52c
($2.60/ADS) which is exactly in line with our forecast.
Get the full analysis of all these stocks by going to
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