Infrastructure
Research Reports Bull & Bear of the Day (DE, JEC)
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We have two standout research calls this morning from Zacks Equity Research. The first is Deere & Co. (NYSE: DE) as ‘The Bull of the Day.’ The second is Jacobs Engineering Group Inc. (NYSE: JEC) as ‘The Bear of the Day.’ Details on each are below.
Deere & Co. (NYSE: DE) generates the highest operating margin in the industry. During the third quarter of fiscal 2010, the company delivered earnings per share of $1.44, surpassing the Zacks Consensus Estimate of $1.25 and outperforming its peer Caterpillar Inc. by $0.22.
With an intact farming customer base and improving economic conditions, the company’s sales are ready to rebound significantly. Moreover, Deere is likely to receive a boost from the new Tier4i engine developed recently.
The stock is trading at a discount of 17% to the peer group, based on forward earnings estimates. Our long-term Outperform recommendation indicates that it will perform well above the market. Our target price of $93.00, 20.6x 2010 EPS of $4.51, reflects this view. FULL DEERE ANALYST REPORT
Zacks noted on Jacobs Engineering Group Inc. (NYSE: JEC): We have downgraded our recommendation on Jacobs Engineering (NYSE: JEC) from Neutral to Underperform based on the company’s continuous decrease in backlog since the beginning of fiscal 2010, which is expected to negatively affect its top-line results in fiscal 2011.
Hence, we reduce our fiscal 2011 estimate by 3 cents. The stock is cyclical in nature, and thus the sluggish economic environment, which has reduced the client’s spending power, was the prime reason for the decrease in backlog.
Large investors fear to infuse capital in the unstable market conditions. Moreover, the company faces immense risk as it operates in a highly-competitive environment. FULL JACOBS ENGINEERING ANALYST REPORT
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