(Source: Business Wire)
Zacks Equity Research picks Sempra Energy (NYSE: SRE) as Bull of the Day and SLM Corp. (NYSE: SLM) as Bear of the Day. In addition, the analysts at Zacks Equity Research discuss the latest on The Royal Bank of Scotland (NYSE: RBS), Wendy's/Arby's (NYSE: WEN) and Cosan Limited (NYSE: CZZ).
Full analysis of all these stocks is available at: http://at.zacks.com/?id=2678
Bull of the Day
Looking ahead, a base of stable earnings, steady progress at Sempra Energy's (NYSE: SRE) LNG terminals, regulatory approval of utility rate cases and the Sunrise Powerlink transmission line, operational REX-West, and completion of its first solar power project, collectively support the bullish outlook for SRE.
Furthermore, given a discount in P/E multiples, we maintain our BUY recommendation on SRE with a six-month target price of $45.50.
Price appreciation to our near-term valuation target coupled with a sustainable and secure, recently increased quarterly dividend of $0.39 per share based on low projected earnings payouts represents annualized total return potential of 23.9%.
Bear of the Day
The shares of SLM Corp. (NYSE: SLM), also known as Sallie Mae, sold off sharply on February 26, on the news of the budget proposal by President Obama regarding the elimination of subsidies for student lenders. Further, SLM's 4Q08 core net operating income came in at $0.14 per diluted share, substantially short of our estimate.
Higher funding costs were the primary reason for the lower-than-expected results. However, the performance of the private credit portfolio was better than expected. We expect funding costs to come down slightly once the federally sponsored programs (TALF and Conduit Facility) become operational.
But the proposal for the elimination of private lenders from the student-loan market is a significant threat to the company. As such, we maintain our Sell recommendation on shares of SLM.
We maintain our SELL rating with a lower six-month target price of $7.00.
Recent Analysis from the Analyst Blog
RBS Going Back to Its Roots
As pre-announced on January 19, The Royal Bank of Scotland (NYSE: RBS) posted a 2008 full-year statutory loss of £24.1 billion, including a goodwill impairment charge of £32.6 billion.
More importantly, the company announced a restructuring plan that will cut £2.5 billion out of its cost base and is aimed at taking RBS back to its roots, centered in the UK with a more limited global operation.
