Zacks Analyst Blog Highlights: Dow Chemical Co., Rohm and Haas Co., Estee Lauder Companies, Potash Corp. and Garmin Ltd.
2008-07-29 01:51:02 -
- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Dow Chemical Co. (NYSE: DOW), Rohm and Haas Co. (NYSE: ROH), Estee Lauder Companies (NYSE: EL), Potash Corp. (NYSE: POT) and Garmin Ltd. (Nasdaq: GRMN).
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Here are highlights from Friday's Analyst Blog:
Dow Still Setting The Pace
In order to expand its specialty business, Dow Chemical (NYSE: DOW) would takeover Rohm and Haas (NYSE: ROH). This will consolidate the chemical producer's higher-margin and higher-growth specialty businesses and reduce the volatility in earnings and cash flow.
However, high raw material costs have forced the company to temporarily idle or reduce production at several of its plants. Further, Dow has a high exposure to the commodity chemical cycle. We expect earnings to remain under pressure and rate the stock a Hold with a target of $35.00.
Estee Lauder Still Looking Good
Despite a slowdown in consumer spending in the U.S., earnings for Estee Lauder Companies (NYSE: EL) are expected to increase 9.7% this fiscal year. With the stock trading at the low-end of the historical valuation range, we maintain the Buy rating with a price target of $56.25.
The management is focused on delivering sales and earnings growth by through innovative and cutting-edge products in the skin care, makeup, fragrance, and hair care categories. Estee Lauder has solid long-term growth prospects in view of its market presence and brand equity. Positive cash flow has allowed management to return value to shareholders through share repurchases and dividends.
Potash Rides on Global Demand
Potash Corp. (NYSE: POT) has leverage to higher fertilizer application rates, higher crop plantings, increasing demand for biofuels and rising crop prices. The company is located in low cost areas and its financials are solid. Hence, we rate the stock a Buy with a target price of $250.
On July 24, the company announced first-quarter earnings of $2.82 per share, an increase over the $0.88 per share earned in the same period last year. Fertilizer demand remained strong, fueled by the global need to increase food production and supportive crop commodity prices.
Cheap Garmin a Buy
March quarter results for Garmin Ltd. (Nasdaq: GRMN) fell short of the consensus on both the top and bottom lines. All segments are expected to be up double digits in 2008. Pricing pressures continue to intensify, negating some of the growth in units.
Management is optimistic about material prices offsetting ASP pressures in 2008. We see increasing revenue and gradually decreasing profitability for the company. However, being a market leader, the company should fare better than most of the other smaller players. Consequently, we view the declining share price as an opportunity to accumulate shares, and we reiterate Buy.
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