Zacks Bull and Bear of the Day Highlights: Allstate, JAKKS Pacific, Target, JPMorgan and Costco Wholesale

 Zacks Bull and Bear of the Day Highlights: Allstate, JAKKS Pacific, Target,
                        JPMorgan and Costco Wholesale

PR Newswire

CHICAGO, Oct. 29, 2012

CHICAGO, Oct. 29, 2012 /PRNewswire/ -- Zacks Equity Research highlights
Allstate Corp. (NYSE:ALL) as the Bull of the Day and JAKKS Pacific, Inc.
(Nasdaq:JAKK) as the Bear of the Day. In addition, Zacks Equity Research
provides analysis on Target Corporation (NYSE:TGT), JPMorgan Chase & Co.
(NYSE:JPM) and Costco Wholesale Corporation (Nasdaq:COST).


Full analysis of all these stocks is available at

Here is a synopsis of all five stocks:

Bull of the Day:

We have upgraded our recommendation on Allstate Corp. (NYSE:ALL) to Outperform
based on significant reduction in catastrophe losses, claims and operating
expenses coupled with enhanced premiums that improved the combined ratio, ROE
and book value per share so far in 2012. Also, these factors aided the
company's second quarter earnings upbeat, substantially outpacing the Zacks
Consensus Estimate.

An appreciated investment portfolio boosted the operating cash flow and
liquidity. The agency expansions, ratings affirmation, dividend increment,
product restructuring and acquisitions validate Allstate's long-term
stability. However, initiatives to improve auto and homeowners margins are yet
to show effective results, whereas interest volatility poses risks to Allstate
Financial's margins.

Though the current volatile economy will continue to impact results, continued
synergies are expected from Allstate's industry-leading position,
diversification and pricing discipline. All these should augur growth once the
markets regain momentum.

Bear of the Day:

With product launches, possible acquisitions, strategic partnerships,
resolution of litigation and a strong financial condition, JAKKS Pacific, Inc.
(Nasdaq:JAKK) is well poised for long-term growth. However, a tough retail
environment leading to lower domestic product sales and a decline in product
orders before the crucial holiday season compel the company to cut its fiscal

Additionally, decelerating margins, a top- and bottom-line miss in the third
quarter of 2012, unfavorable product mix and wage inflation in China add
further worry. The uncertainty around the upcoming presidential election and
the fiscal cliff in the U.S., along with global economic turmoil due to the
Eurozone crisis will likely keep consumers preoccupied and less inclined
toward entertainment activities.

Hence, we maintain our Underperform recommendation on the stock. Our six-month
target price of $12.00 equates to about 24.5x our estimate for 2012. The
target price implies an expected negative total return of 5.6% over that

Latest Posts on the Zacks Analyst Blog:

Target to Shelve Credit Card

Target Corporation (NYSE:TGT) recently reached an agreement with TD Bank Group
to sell its credit card portfolio for the amount which equates the gross value
of the total outstanding receivables at the time of the closure of the deal.
The current gross value of the portfolio stands at $5.9 billion.

Moreover, the company entered into a 7-year agreement with TD Bank Group under
which the latter will underwrite, fund and own the future Target Credit Card
and Target Visa receivables in the United States. The company expects to close
the deal in the first half of calendar 2013 and stated that its 5% REDcard
Rewards program will not be a part of the deal.

As per the deal, TD will look after the policies related to risk management
and would comply with the regulatory issues. On the other hand, Target will
manage account servicing functions.

Target, the operator of general merchandise and food discount stores in the
United States, announced its decision to sell its credit card receivables
portfolio almost a couple of years ago. However, nothing materialized for the
company as its desires to sell the receivables portfolio on appropriate terms
appeared high on valuation to the buyers.

Later in early 2012, Target promised to pay down $2.8 billion to Chase Card
Services – a subsidiary of JPMorgan Chase & Co. (NYSE:JPM) – to retire the
receivables financing received in 2008. By doing so, the company expected to
market the portfolio better, thus gaining a high-quality buyer on favorable

Getting back to the agreement, the company expects to use the proceeds from
the sale to reduce its debt burden and for share buybacks. Additionally, the
company is expected to earn sizeable profits from the Target Credit Card and
Target Visa portfolios, under the profit sharing arrangement.

Our Take

During the last reported quarter, the company's revenue from the Credit Card
segment tumbled 5.1% to $328 million. Target also said that segment profit
dropped to $140 million in the quarter from $171 million in the prior-year

The segment has long been grappling with declining revenues and sustaining the
business might prove to be detrimental for the company's financials as the
requirement for bad debt provisions would be higher, which implies reduced
growth capital for future expansions.

Currently, we have a long-term Neutral recommendation on the stock. Moreover,
the company, which competes with

Costco Wholesale Corporation

(Nasdaq: COST), holds a Zacks #2 Rank, which translates into a short-term Buy

Get the full analysis of all these stocks by going to

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