Zacks Bull and Bear of the Day Highlights: CPFL Energia, Zions Bancorp, CDC Corp., Kodiak Oil & Gas and Cytori Therapeutics
2008-11-12 12:13:04 -
- Zacks Equity Research highlights CPFL Energia (NYSE: CPL) as the Bull of the Day and Zions Bancorporation (Nasdaq: ZION) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on CDC Corporation (Nasdaq: CHINA), Kodiak Oil & Gas (NYSE: KOG) and Cytori Therapeutics Inc. (Nasdaq: CYTX).
Full analysis of all these stocks is available at at.zacks.com/?id=2676.
Here is a synopsis of all five stocks:
Bull of the Day: CPFL Energia (NYSE: CPL)
We are changing our rating on CPFL Energia from Hold to Buy. The company posted slightly lower-than-expected results for the third quarter of 2008. However, the outlook for the following quarters remains positive, mainly considering the growing demand for electricity in Brazil in spite of the difficult business environment around the world.
We also believe that the tariff correction in 2009 and its solid dividend payout will be positive for the stock. Finally, after the recent sell-off, its valuation is highly attractive again.
We do not expect a recession in Brazil as a result of the international credit crisis. Also, Tariff correction for 2009 is expected to be very high since the correction will be made on the basis of the IGP (Brazilian Producer Price Index-PPI), which is expected to reach at least 10% in 2008.
Bear of the Day: Zions Bancorporation (Nasdaq: ZION)
ZION's 3Q08 operating earnings of $0.51 per diluted share were substantially below our estimate as well as consensus. The earnings for the quarter were mostly impacted by the sharp increase in provisions coupled with impairment and valuation losses on securities.
Ongoing weakness in the Southwestern residential real estate markets, where the company has significant exposure, continues to hurt the results. Though loan and deposit growth were satisfactory, NIM declined further during the quarter.
After reviewing the results, we have lowered our EPS estimates, based on our concerns for further credit deterioration and dilutive effect of the capital raise. We are maintaining our Sell recommendation on the shares of ZION.
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CDC Corporation (Nasdaq: CHINA)
With a strong track record in consolidation and organic growth of its software business, we believe CDC Corporation is poised for growth. With continuous focus on vertical industries and cost reduction initiatives in its software segment, CDC should develop a significant competitive advantage in this year and beyond.
New launches and upgrades (Yulgang 2.0 and Ross Enterprise v6.3) in its product line as well as its share repurchase plan currently in action will further help the company drive growth. As such, we maintain our Buy rating on the shares of CDC with a six-month target price of $3.50.
Kodiak Oil & Gas (NYSE: KOG)
We are maintaining our Buy recommendation but decreasing our price objective for Kodiak Oil & Gas Corp. shares following its mixed quarterly results. The decrease in our price objective is primarily a result of our adjusted commodity-price deck and reduced production estimates.
Kodiak's plans for next year almost entirely target the Bakken (Shale of the Fort Berthold Indian Reservation), which could emerge as another core asset to its Vermillion play. The company has drawn a tentative plan to spend approximately $40 million next year, using a combination of cash on hand, pre-paid outlays and funds from its credit facility. The total amount spent, however, will depend on results of its initial exploration efforts and the commodity-price backdrop.
Cytori Therapeutics Inc. (Nasdaq: CYTX)
This is clearly an exciting time for Cytori Therapeutics, as the company has begun to record product sales revenues from early-adopter Celution System placements in Europe and Asia. Additionally, sales of StemSource cell banking are also now beginning to ramp.
Ultimately, the clinical data will determine the pace at which the ramp continues in the next several years. We have been encouraged by the small clinical data seen so far using Cytori's technology. We think the company is in store to report a solid fourth quarter, and the Street has yet to take notice of the upside that exists over the next few years.
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