Zacks Equity Research highlights Corrections Corp. (NYSE: CXW) as the Bull of the Day and FormFactor (Nasdaq: FORM) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Credit Suisse Group (NYSE: CS), Caterpillar, Inc. (NYSE: CAT) and Simon Property Group (NYSE: SPG). Full analysis of all these stocks is available at http://at.zacks.com/?id=2676.
Here is a synopsis of all five stocks:
Bull of the Day: Corrections Corp. (NYSE: CXW)
We reiterate our Buy rating on shares of CXW, based primarily on valuation. The company holds a significant market share advantage over its peers, with a substantial pipeline of additional capacity scheduled to be added to the portfolio over the next two years. The company is the clear leader in an industry with a strong outlook, supported by favorable economic and demographic trends.
We consider the current price to represent an attractive entry point. The company is scheduled to report first quarter financial results on Tuesday, May 6, 2008. We will update our estimates and outlook at that time.
Bear of the Day: FormFactor (Nasdaq: FORM)
FormFactor is the market leader in advanced wafer probe cards used to test semiconductor wafers during the manufacturing process. The combination of a very difficult pricing environment in DRAM and product execution problems, in the 4th quarter have led to the shares being slammed. The company has a very strong long-term growth profile, but it appears as though the DRAM market will not improve in the near term.
We envision a strong future for FORM, but for the next two quarters FORM should not see strength in DRAM. We our downgrading our rating on FORM shares to Sell.
Latest Posts on the Zacks Analyst Blog:
Credit Suisse Group (NYSE: CS)
We are continuing our Hold on Credit Suisse Group, but raising our target price to $55. Credit Suisse posted a first quarter loss of CHF2.1 billion, in line with guidance provided on March 20. This reflected CHF5.3 billion in writedowns at investment banking in the structured products and leveraged finance businesses related to credit market turmoil, as well as CHF566 million in writedowns at asset management.
We are cutting our 2008 EPADS estimate to $2.50 from $5.85, and initiating our 2009 estimate at $5.95. Results should continue to reflect problems stemming from weakness in the subprime mortgage and other credit markets. CSG has repurchased CHF4.1 billion shares (of CHF8 billion total) and increased the dividend by 12%.
Caterpillar, Inc. (NYSE: CAT)
Caterpillar Inc. reported first quarter EPS of $1.45, above our expectations of $1.28, due to a lower share count, increased price realization, and higher international sales volume. The company remains committed to capacity expansion in growth markets outside the U.S., which positions CAT to increase share in mining and energy-related equipment.
Our FY08 EPS estimate of $6.19, which is at the high-end of management guidance, assumes 30% revenue growth in the Middle East, Asia Pacific, and Latin America, no growth in North America, and a share count of 608 million. Our target price is $87.00.
Simon Property Group (NYSE: SPG)
Simon Property Group reported 1Q08 FFO of $1.46 per share, up 6.6% from the year earlier quarter. Operations are holding up reasonably well and the company reported year-over-year increases in sales per square foot, rent per square foot, and SS net operating income.
The retail environment will get worse in 2008 as consumers are cutting back spending, and we would lessen our exposure to the retail sector. Simon has good assets, geographic diversity and a stable balance sheet, which will allow the company to better withstand the current economic downturn.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
About the Bull and Bear of the Day
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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