BAYRY Bayer Aktiengesellschaft (PK)

CHICAGO, Feb. 7, 2011 /PRNewswire/ -- Zacks Equity Research highlights: Suntech Power Holdings Co. (NYSE: STP) as the Bull of the Day and Bayer AG (OTC: BAYRY) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Manpower (NYSE: MAN), Macy (NYSE: M) and Ford (NYSE: F).

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Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.

Here is a synopsis of all five stocks:

Bull of the Day:

Suntech Power Holdings Co. (NYSE: STP) is one of the largest producers of PV solar modules in the world. The company is prudently expanding its revenue base to divergent markets around the globe, along with increasing megawatts shipped.

To cater to this rising demand, the company is furiously ramping up its capacity with plans to attain 2.4GW of cell & module and 1.2GW of wafer by the end of 2011. Along with this higher conversion efficiency through its Pluto technology-enabled modules, China's subsidy program and improving operating efficiencies adds visibility to the story.

In light of the above positives we feel the current discounted valuation of the company is unwarranted. Thus we upgrade our recommendation on the company to Outperform.

Bear of the Day:

We are downgrading Bayer AG (OTC: BAYRY) to Underperform, primarily due to the lack of near-term late-stage catalysts and generic competition. We note that the Yaz family of oral contraceptives performed disappointingly in the most recent quarter, mainly due to low US demand resulting from increased generic competition.

Moreover, any hiccups or delays in the US approval of blood thinner Xarelto will weigh heavily on the stock. Furthermore, we believe that the FDA approval of Boehringer Ingelheim's Pradaxa last year will eat into the upside potential for Xarelto.

These negative factors cause us to believe that there is little reason for investors to own the stock at current levels. Our target price of $68.00 is based on approximately 11.1x our 2011 EPADR estimate of $6.10.

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Big Jobs Disappointment

In a disappointing nonfarm payroll report for January, fewer than expected jobs were created. The 'miss' was particularly striking given the many other reports that were pointing otherwise.

On the positive side, the unemployment rate dropped significantly and the originally reported number for the prior month was revised upwards. However, even accounting for the very unfavorable weather we have been getting recently, these numbers are very disappointing.

The Bureau of Labor Statistics reported the creation of 36,000 jobs in January, with private sector jobs at 50,000. Expectations were for private-sector job creations of around 150,000. On Wednesday, the ADP had reported private-sector jobs of 187,000.

The unemployment rate dropped to 9% from 9.4% in November; the expectation was for an increase to 9.5%. The December number was revised to a gain of 121, 000 from the originally reported 103,000 number. In line with expectations, the average workweek dropped and average hourly earnings ticked up.

The dismal payroll numbers are completely out of sync with other important indicators that have been showing positive momentum in the labor market. The ADP has been reporting strong monthly gains and the Jobless Claims data has been sharply coming down over the last few months. The employment component of the ISM manufacturing index this week reached its highest level since the early 1970's. Comments from some industry players, such as Manpower (NYSE: MAN), corroborate this trend.

Broad measures of economic growth have also not only improved but moved decidedly into much more sustainable territory. The fourth-quarter GDP growth rate was devoid of the temporary growth drivers that had been characteristic of the economy's turnaround thus far. Economic expansion in the last quarter of 2010 reflected consumer spending and corporate investments, with government spending and inventory adjustments essentially missing in action.

The consumption strength was also on display in the holiday shopping season and other metrics of retail sales. We saw yesterday that retailers like Macy's (NYSE: M) had impressive same-store sales numbers in January despite the extremely unfavorable weather in large parts of the country.

This evolving environment positions consumer-centric companies for strong performance this year. Automakers look particularly interesting, particularly following the recent group-wide pullback following Ford's (NYSE: F) soft-looking quarterly numbers.

But for this trend to fully take hold, the payroll data needs to start reflecting the overall improvement that is more than evident all around us. We didn't get that in today's non farm payroll report.

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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