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: Exxon Mobil Corp. (NYSE: XOM), MBIA Inc. (NYSE: MBI), Universal Forest Products, Inc. (Nasdaq: UFPI), Philippine Long Distance Telephone Co. (NYSE: PHI) and United Natural Foods Inc. (Nasdaq: UNFI).
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Here are highlights from Tuesday’s Analyst Blog:
Exxon: Defensive Play with Growth
We are maintaining our Buy recommendation and price objective on Exxon Mobil Corporation (NYSE: XOM) shares following the company's strong second-quarter results. The company performed strongly in the upstream business, earning $10 billion during the quarter, reaping the benefits of high commodity prices.
Exxon also remained active in returning capital to shareholders during the quarter, paying out over $10 billion through share repurchases and dividend payments. We continue to like the company for its best-in-class upstream business, a chemicals business that is fully integrated with its quality refining assets, an exceptionally strong balance sheet rated AAA, and a track record of returning significant capital to shareholders.
MBIA a Sell on Rating Downgrades
Following two quarters of heavy losses, MBIA Inc. (NYSE: MBI) posted positive results for 2Q08 driven by $3.3 billion in pretax unrealized gains on insured credit derivatives.
However, ratings downgrades by Standard & Poor's and Moody's should impact MBI's asset management business and its ability to write new insurance business. We believe that resumption of share repurchase program, suspended a year ago, will provide some support to the shares. But until the global credit markets stabilize, we expect continued whipsawing of the financial markets for the rest of 2008, and perhaps into 2009.
Universal Forest with Headwinds
Universal Forest Products, Inc. (Nasdaq: UFPI) reported second quarter earnings of $0.61 per share versus $0.86 per share in the prior-year quarter, due to ongoing weakness in the lumber market and weak consumer spending. However, UFPI remains on track for market share gains in the industrial unit and among the big box retailers. Market share gains are critical to offset the slowing sales growth related to housing.
We expect a continued drop in housing starts and home equity withdrawal to negatively impact building product sales to the site-built and retail channels. We reiterate our Hold recommendation on shares of UFPI with a target price of $28.50.
Philippine Telecom a Buy to $72
As the leading provider of telecom services (both fixed line and wireless) in the Philippines, Philippine Long Distance Telephone Company (NYSE: PHI) stands to benefit from the positive networking effect of the largest subscriber base in the country. The company continues to generate substantial free cash flow enabling higher cash dividend payout and acquisitions.
It has successfully reduced its total debt balance from $3.80 billion in 2002 to $1.5 billion as of June 2008. Consolidated Net Debt is down to $782 million. Smart Communications, the company's wireless subsidiary, continues to maintain its position in terms of subscriber base and profitability. Wireless subscribers by the end of June 2008 stood at over 33.2 million. However, rising fuel and food prices could unfavorably affect revenue growth rate as these compete with telecom services for a share of consumer expenditure.
United Nat'l Foods Nicely Priced
United Natural Foods Inc. (Nasdaq: UNFI) continues to experience broad-based revenue growth and stable-to-improving operating margins ex one-time items. Benefiting from the positive trends in the natural foods industry and improved distribution capacity, the company is expected to continue to grow in terms of sales.
United Natural Foods is well positioned to deliver consistent double-digit topline growth in fiscal 2008. The near-tern earnings dilution from the Millbrook acquisition has created a valuation-based buying opportunity. The Buy rating is maintained.
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