CHICAGO - (Business Wire) Zacks Equity Research highlights McDonald's (NYSE: MCD) as the Bull of the Day and Genzyme (Nasdaq: GENZ) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Berkshire Hathaway (NYSE: BRK.A), Burlington Northern Santa Fe Corp (NYSE: BNI) and Berkshire Hathaway (NYSE: BRK.B). Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Bull of the Day:
McDonald's (NYSE: MCD) global same-store sales continue to grow (up 3.8% in the third quarter of 2009) while maintaining healthy margins and out-performing competitors. Earnings surpassed the Zacks Consensus Estimate, and were up 10% year over year.
However, a strong U.S. dollar continues to moderate results, adversely impacting the top and bottom lines. We expect continued headwind from a stronger dollar, but this is a translation impact, and will not affect the fundamentals of overseas operations, which operate entirely in local currency.
With a strong balance sheet, consistent earnings, healthy cash flow and a generous dividend, we think the stock provides relative safety and moderate growth in a turbulent environment and exposure to faster-growing international markets. As such, we maintain an Outperform recommendation.
Bear of the Day:
Genzyme (Nasdaq: GENZ) reported third quarter earnings of 31 cents per share, in-line with the Zacks Consensus Estimate but well below the year-ago earnings of 53 cents per share. Moreover, revenues declined 9% to $1.06 billion.
The company has been under significant pressure following the shutdown of its Allston manufacturing facility in June 2009. The shutdown is a major setback as three drugs -- including key product Cerezyme -- were being manufactured at the facility. Although Genzyme has resumed production, new lots will not be available until later this year.
The shutdown has affected the company's performance causing Genzyme to slash its outlook for 2009. Supply constraints, manufacturing issues and delays in new product launches will continue to weigh on the shares. We would avoid the name.
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Berkshire Buys Burlington Northern
Warren Buffett's Berkshire Hathaway (NYSE: BRK.A) said on Tuesday that it is acquiring Burlington Northern Santa Fe Corp (NYSE: BNI) for $44 billion. This is the biggest acquisition ever for Berkshire Hathaway.
With this acquisition, Berkshire Hathaway is adding the railroad transportation business to its already diverse range of businesses including retail sales, insurance and financials, newspaper publishing, manufacturing, business services and several regional electric and gas utilities.
Berkshire Hathaway, which already owns 22.0% stake in Burlington Northern, has offered $100 per share in cash and stock for the remaining portion of the holding.
The transaction which is contingent on approval by two-thirds of Burlington’s outstanding shareholders is expected to close by first quarter of 2010. Burlington Northern will continue operating from its Fort Worth, TX headquarters.
Berkshire “B” Shares Split 50-1
Lost in today's news that Berkshire Hathaway was acquiring Burlington Northern was the announcement that Berkshire's "B" shares (NYSE: BRK.B), or, commonly known by investors as the "cheaper" shares, would be split 50 to 1.
It is rare to see a stock split for either the Berkshire "A" shares or the "B" shares. Over the years, Warren Buffett has resisted calls to split the stock.
The "A" shares have long been out of reach for nearly everyone except professional investors. In the past 52 weeks, those shares traded in the range of $70,000 to $119,000 per share.
The "A" shares are obviously not very attainable for most investors.
Many investors turned to the "B" shares but even those "cheaper" shares traded in the range of $2241 to $3969 in the last 52 weeks. Again, for many investors, owning a share of Berkshire was likely out of reach.
Berkshire's board voted for the 50 to 1 split in the deal to acquire all of Burlington Northern with 60% cash and 40% stock. It would transform Berkshire's "B" shares into a price that most investors can afford.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
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