Health & Fitness
Health and Fitness
Health and Fitness
Tue, February 17, 2009 Zacks Bull & Bear of the Day Highlights: Baxter International, Marriott International, UDR, AIV and Vornado
CHICAGO--([ BUSINESS WIRE ])--Zacks Equity Research picks Baxter International, Inc. (NYSE: [ BAX ]) as Bull of the Day and Marriott International Inc. (NYSE: [ MAR ]) as Bear of the Day. In addition, the analysts at Zacks Equity Research discuss the latest on UDR Inc. (NYSE: [ UDR ]), Apartment Investment & Management Co. (NYSE: [ AIV ]) and Vornado Realty Trust (NYSE: [ VNO ]).
Full analysis of all these stocks is available at: [ http://at.zacks.com/?id=2678 ]
Bull of the Day
Baxter International, Inc. (NYSE: [ BAX ]) is a global medical products and services company with expertise in medical devices, pharmaceuticals, and biotechnology. The company is comprised of three operating segments: BioScience, Medication [ Delivery ] and Renal.
We believe these markets will remain relatively insulated from the current economic turmoil and provide investors with good quality returns on a risk-adjusted basis. Baxter's strong market position is demonstrated in its recent quarterly and annual performance that exceeded their prior estimates.
We remain bullish on this stock and believe it provides a less risky vehicle during the current economic turbulence. We believe BAX should trade at a 15% [ premium ] to the group P/E/G average of 1.2. The resulting P/E is 18.6x 2009, producing a target price of $64.65 per share.
Bear of the Day
Marriott International Inc. (NYSE: [ MAR ]) is a leading worldwide hospitality company with a primary focus on property management and franchising. We maintain our Sell rating on [ shares ] of Marriott, following the release of 4th quarter results.
The operating environment in the lodging sector is expected to remain weak throughout 2009 with substantial RevPAR declines forecasted. Additionally, the company's timeshare segment is struggling, with sales down and credit market turmoil preventing the company from completing note sales.
Given our forecast for negative [ earnings ] growth in 2009, along with the ongoing uncertainty regarding the state of the economy and its potential impact on Marriott's lodging and timeshare businesses, we rate the shares a Sell at this time.
Recent Analysis from the Analyst Blog
Expect More REIT Stock Dividends
The IRS is helping commercial real estate owners out with a new rule that allows REITs [real estate [ investment ] trusts] to pay up to 90% of their dividends in stock. After what we assume was much lobbying, the IRS changed the rule to help REITs conserve cash in a liquidity constrained environment.
We expect more REITs to take advantage of this rule in 2009, so while current yields on equity REITs are high -- about 8.5% on average -- much of that will come from new stock, not cash. This is beneficial companies, who are now able to meet distribution requirements with no cash, but hurts income oriented [ investors ].
We are generally negative on this development, and would rather have companies cut their dividend instead of forcing new shares on investors. Many REITs including UDR Inc. (NYSE: [ UDR ]), Apartment Investment & Management Co. (NYSE: [ AIV ]) and Vornado Realty Trust (NYSE: [ VNO ]) have already announced some form of stock dividend.
Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: [ 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.
About the Analyst Blog
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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Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
