Zacks Bull and Bear of the Day Highlights: Western Union, ICICI Bank, Caterpillar, Joy Global and CNH Global NV

CHICAGO, Jan. 20, 2012 /PRNewswire/ -- Zacks Equity Research highlights Western Union Co. (NYSE: WU) as the Bull of the Day and ICICI Bank Ltd. (NYSE: IBN) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Caterpillar Inc. (NYSE: CAT),Joy Global Inc. (NYSE: JOY) and CNH Global NV (NYSE: CNH).

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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:

We are reiterating our recommendation on the shares of Western Union Co. (NYSE: WU) at Outperform prior to its fourth quarter earnings release slated on February 7, 2012. For the first nine months of 2011, Western Union has shown a solid earnings performance.

In our view, the company is poised for long-term growth, which is validated by the combination of demographic trends, new market opportunities and its advantages of scale. Several new initiatives like B2B, prepaid, banking, mobile and wu.com also poise the company well for long-term growth. The company also benefits from a continued strong cash flow, allowing shareholders to be rewarded with acquisitions, share buybacks and increased dividends.

Our six-month target price of $23.00 equates to about 12.8x our earnings estimate for 2012. We view the annual dividend of $0.32 per common share as secure, implying an expected return of about 23% over that period. This is consistent with our Outperform recommendation on the stock.

Bear of the Day:

We are downgrading our recommendation on ICICI Bank Ltd. (NYSE: IBN) to Underperform primarily on rising operating expenses. Net earnings for the second quarter of fiscal 2012 increased, but a substantial increase in operating expenses was the headwind.

We anticipate continued synergies from the company's increased dependence on domestic loans, an almost stable funding base and market leadership in the insurance business. However, we are concerned about ICICI's highly competitive operating environment and below-average credit quality.

Our six-month target price of $26.00 per ADS equates to about 12.3x our earnings estimate for fiscal 2012. This target price implies an expected negative total return of 8.6% over that period. This is consistent with our Underperform recommendation on the ADSs.

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CAT Selling Bucyrus Distribution

Caterpillar Inc. (NYSE: CAT) is selling the distribution and support unit, formerly operated by Bucyrus International Inc. in South America, Western Canada and the United Kingdom, to Finning International Inc. of Vancouver, Canada, for $465 million. The sale of the unit is part of its integration of Bucyrus.

The distribution and support business generates revenues of around $600 million. The unit was included in Caterpillar's purchase of Bucyrus Inc., a South Milwaukee-based manufacturer of surface and underground mining equipment, in July 2011. The $8.8 billion buyout was the biggest deal ever in Caterpillar's history. It capitalized on the rising demand for coal and minerals triggered by growth in emerging nations. Earlier in December, Caterpillar sold a part of the Bucyrus distribution business to the Industrial Division of Sime Darby Berhad for $360 million.

The Caterpillar-Bucyrus combined portfolio broadens Caterpillar's mining equipment product line, resulting in the most expansive product offering in the mining equipment industry. Furthermore, Caterpillar can leverage Bucyrus' strong presence in the emerging markets, its successful aftermarket parts business and support services for its equipment. The Bucyrus acquisition positions Caterpillar as the leading global mining original equipment manufacturer. The combined product portfolio dwarfs Joy Global Inc. (NYSE: JOY), the only other manufacturer of surface and underground mining equipment in the US.

Caterpillar is riding the wave of heightened construction and mining activity in the developing markets, answering to a demand for more coal, copper and iron ore. The company expects this demand to grow over the next decade. We thus expect Caterpillar to maintain its revenue and EPS growth trajectory. Further, given its strong balance sheet and cash position, we expect another dividend increase from the company.

Shares of Caterpillar presently retain a Zacks #1 Rank (short-term Strong Buy recommendation).

Peoria, Illinois-based Caterpillar Inc. is the manufacturer of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. The company is one of the few leading U.S. companies in an industry that competes globally from a principally domestic manufacturing base. Caterpillar operates three divisions – Machines, Engines and Financial Products. Caterpillar competes with the likes of CNH Global NV (NYSE: CNH).

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.

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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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