Zacks Bull and Bear of the Day Highlights: ManpowerGroup, HDFC Bank, Diamond Offshore Drilling, BP Plc and Marathon Oil Corporation

Thu Jun 16, 2011 9:30am EDT

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Zacks Bull and Bear of the Day Highlights: ManpowerGroup, HDFC Bank, Diamond Offshore Drilling, BP Plc and Marathon Oil Corporation

PR Newswire

CHICAGO, June 16, 2011 /PRNewswire/ -- Zacks Equity Research highlights: ManpowerGroup (NYSE: MAN) as the Bull of the Day and HDFC Bank, Ltd. (NYSE: HDB), as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Diamond Offshore Drilling Inc. (NYSE: DO), BP Plc (NYSE: BP) and Marathon Oil Corporation (NYSE: MRO).


Full analysis of all these stocks is available at

Here is a synopsis of all five stocks:

Bull of the Day:

ManpowerGroup's (NYSE: MAN) first-quarter 2011 results topped Zacks expectations on the heels of revenue growth across all geographies with several European and emerging markets portraying robust trends. Management now expects second-quarter 2011 earnings between $0.74 and $0.82 per share.

We believe that ManpowerGroup's brand value, comprehensive range of services and a strong global network provides a competitive advantage and reinforces its dominant position in the market. Moreover, the company stands to benefit from growth prospects in under-penetrated staffing markets.

The stock is trading at a discount based on its fiscal 2011 forward earnings estimate. We have a long-term Outperform recommendation on the stock. Our target price of $61.00, 19.4X 2011 EPS, reflects this view.

Bear of the Day:

HDFC Bank, Ltd.'s (NYSE: HDB) fiscal fourth quarter 2011 (ended March 31, 2011) net earnings were up 33.2% year over year. However, higher operating expenses were among the negatives. The company is still exposed to the threat related to higher cost of funds. Also, growing competition in the retail space with the re-entry of peers is a future concern.

Most Indian banks are expected to encounter higher costs of funds as they have to raise deposit rates to meet increasing loans demand. This will keep margins of some banks, including HDFC Bank, under pressure.

Our six-month target price of $146.00 per ADS equates to about 24.7x our earnings estimate for fiscal 2012. This target price implies an expected negative total return of 9.3% over that period. This is consistent with our long-term Underperform recommendation on the ADSs.

Latest Posts on the Zacks Analyst Blog:

BP Employs Diamond's GoM Rig

Diamond Offshore Drilling Inc. (NYSE: DO) has decided to shift a deepwater rig from the Gulf of Mexico (GoM). Diamond is slated to relocate the rig to work for BP Plc (NYSE: BP) in Vietnam, under a three-month contract recently signed by the two companies.

Diamond's deepwater rig Ocean Monarch is scheduled to drill two wells for the British oil giant at the rate of $340,000 per day. The rig, capable of drilling up to 10,000 feet of water, is slated to reach Vietnam in November. However, Diamond pointed out that Ocean Monarch will be able to enter into the BP contract only after the closure of its current deal with Marathon Oil Corporation (NYSE: MRO). The ongoing contract with Marathon has a dayrate of about $290,000 and is valid till mid August.

Ocean Monarch is the third Diamond rig to leave the GoM since the Deepwater Horizon explosion in April last year and the subsequent deepwater drilling ban in U.S. waters. Diamond is not the only driller to leave the GoM. Already 7 of the 30 rigs that were previously functional in the U.S. Gulf have abandoned the region following the blowout incident. However, there still remains some hope for the distraught region with some departed rig planning a comeback.

Ocean Endeavor –– the first rig that Diamond removed from the GoM had already extended its one-year contract period for another eight months with Burullus Gas Co. of Egypt. After Monarch leaves the region, Diamond will have only one deepwater in the nearby waters.

We believe last year's drilling moratorium and increased regulations will likely have an enduring impact on the company. However, a gradually improving regulatory environment in the GoM is expected to be favorable for Diamond's domestic fleet performance.

Get the full analysis of all these stocks by going to

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.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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