Zacks Equity Research highlights China Mobile (CHL) as the Bull of the Day and Canon, Inc. (CAJ) the Bear of the Day. In addition, Zacks Equity Research provides analysis on United Health Care (UNH), Aetna (AET) and Humana (HUM).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2676.
Here is a synopsis of all five stocks:
China Mobile (CHL)
China Mobile (CHL), the largest wireless carrier in the world, continues to deliver healthy operating results as evidenced by strong subscriber accretion in 2008. As we approach the 3rd and 4th quarters of 2009, our opinion remains firm that the new competitive entities will face unanticipated challenges deploying and advancing services to levels and coverage delivered by China Mobile.
Accordingly, we assess that successful expansion into low-penetration rural regions of China coupled with aggressive 3G TDSCDMA service deployments in 2009, and customized mobile value-added services establish China Mobile as the dominant mobile provider, far ahead of its nearest competitors. Additionally, a strong balance sheet, strong free cash flow and sustainable dividends facilitate the company's efforts to weather economic volatility.
We maintain our Outperform rating even as we factor-in potential impacts of a more competitive landscape and a comparatively weaker Chinese economy though the end of 2009.
Canon, Inc. (CAJ)
We believe the sharp appreciation of the yen is eroding Canon's (CAJ) revenue and profits. The company expects to improve profitability through product launches and cost-cutting efforts.
The company also lowered its revenue forecast but the earnings forecast remained unchanged for the full year 2009, which is still below the 2008 level. We expect revenue in 2009 to be hurt by weak consumer spending and the worsening global economy, and believe the company will struggle to meet expectations in fiscal 2009.
We maintain our estimates for the full year 2009. We also maintain our Sell recommendation on CAJ shares but increased our six-month target price to $30.00.
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State Unemployment & Health Care
It’s worth noting that among that 10 states with the lowest unemployment rates, 5 are represented by only a single statewide congressman. Furthermore, only 1 state has a House delegation bigger than 10 (Virginia). Conversely, all 50 states have equal representation in the Senate.
Why is this important? It could add to the reasons why health care reform is having so much more trouble in the Senate than in the House. Since health care is provided by so many Americans' jobs, if you are employed, you are more likely to have access to affordable health care. And the constituents for Kent Conrad (North Dakota) and Max Baccus (Montana) are enjoying lower unemployment rates.
That would certainly be a more charitable explanation than just the fact that both get a very big part of their campaign funds from health care interests, which would do extremely well under the proposed bill from the Senate Finance Committee. Under it, there would be no real new competition for the likes of United Health Care (UNH) or Aetna (AET), but the government would force individuals to buy their product, one for which insurance companies could charge whatever they liked.
If it becomes clear that the Finance committee bill is going to be the basis for health care, or if it becomes clear that the whole effort is going to fail, then the health insurance stocks will do very well. Relative to the market, health care stocks are extremely cheap, mostly due to fears (hopes?) that we will get serious health care reform, one that includes a public option.
The bill does contain one sensible step -- eliminating the Medicare Advantage program, which wildly subsidizes the health insurance industry for taking Medicare patients relative to the cost of regular direct Medicare. Humana (HUM) is the firm that is most dependent on the Medicare Advantage subsidy.
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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Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.
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