CHICAGO - (Business Wire) 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:
Johnson & Johnson, Inc. (NYSE: JNJ),
Boston Properties, Inc. (NYSE: BXP),
Matsushita Electric Industrial Co., Ltd. (NYSE: MC),
Deckers Outdoor Corp. (Nasdaq: DECK) and
Mechel Steel Group (NYSE: MTL).
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Here are highlights from Thursday’s Analyst Blog:
J&J Fairly Earns Its Premium
A number of Johnson & Johnson, Inc. (NYSE: JNJ) products are expected to experience declining sales, slowing revenue growth in the next few years relative to 2007. Incremental earnings growth will come in the form of improving margins and share buybacks. Investment in J&J offers consistency, reliability, and perhaps safety in this volatile market. We consider the name a core holding.
Johnson & Johnson currently trades at 15.6x our 2008 EPS estimate of $4.52, somewhat richer than the large-cap pharmaceutical industry average of 13.6x. Historically, J&J has sold at a premium to the S&P 500 and pharmaceuticals. As such, we believe the current price makes J&J stock worth considering as a long-term investment and a core large-cap pharmaceutical holding. We believe the stock is correctly priced, and should post in-line returns over the next six-to-nine months.
Boston Ppys Starts to Recover
Shares of Boston Properties, Inc. (NYSE: BXP) somewhat recovered yesterday after a 13% decline on Monday. BXP has significant exposure to Lehman Brothers, who lease about 2% of the company’s office portfolio.
With the meltdown in the financial services sector and more layoffs expected, office rents should begin to drop in NYC after climbing for years. Despite the grim outlook, we still rate BXP a Hold. The company has a solid balance sheet with low debt and plenty of capacity to be active in discounted acquisitions and development going forward.
Matsushita Outlook Softens
Matsushita Electric Industrial Co., Ltd. (NYSE: MC) has established itself as a global company that uses leading-edge technology to manufacture electronic and electrical products, systems, and components.
In emerging markets, Matsushita aims to increase sales of consumer products by 200 billion yen through increased focus on priority countries such as Brazil, Russia, India, and China (BRIC) and Vietnam. Matsushita also has a healthy balance sheet, with a net cash position of $8,636.6 million or $4.12 per ADS in the first quarter of fiscal 2009.
Deckers Up Off the Deck
We are upgrading Deckers Outdoor Corp. (Nasdaq: DECK) from Sell to Hold. The stock is now trading below our previous target price of $106. At this price, we believe the stock trades at a reasonable valuation that more appropriately reflects its growth prospects. The company indicated that full-priced selling trends continue to support its gross margins as well as retail and e-commerce sales.
Moreover, we have become slightly more optimistic on Deckers. The company appears to be performing better than we anticipated, and we are boosting our estimates for 2008 and 2009. We note that our earnings estimates are still below the Street’s consensus estimates. We are now modeling sales growth of 45% in 2008 and 18% in 2009 with EPS growth of 34% in 2008 and 15% in 2009.
Mechel Steel Holding Up
Mechel Steel Group (NYSE: MTL) has significant back integration and is focused on growth and cutting costs while prices for its products rise. However, a large capital spending program while the risk of weakening prices and demand is high forces us to rate the shares a Hold with a target of $22. This is 4.0x our 2008 estimate.
The company is focused on growth. It is developing existing coal and iron ore reserves, particularly in order to sell more high-quality coking coal and iron ore concentrate to third parties; continuing to make selective acquisitions of coal and other mining enterprises, including new subsoil licenses, particularly in Russia and other CIS countries, and maintaining flexibility to internally source raw-material inputs for the steel-making business.
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