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CHICAGO--(BUSINESS WIRE)--Zacks Equity Research highlights
Allegheny Energy (NYSE: AYE) as the Bull of the Day and Novatel
Wireless (Nasdaq: NVTL) as the Bear of the Day. In addition, Zacks Equity
Research provides analysis on H&R Block (NYSE: HRB), NetEase.com,
Inc. (Nasdaq: NTES) and Neurocrine Biosciences (Nasdaq: NBIX). Full
analysis of all these stocks is available at http://at.zacks.com/?id=2676.
Here is a synopsis of all five stocks:
Bull of the Day: Allegheny Energy (NYSE: AYE)
We expect that the company’s regulated delivery
utility business will provide steady earnings growth, while the generation
business will provide an additional boost to earnings. Accordingly, we maintain
a BUY recommendation on AYE common stock with a six-month target price of
$51.75.
Price appreciation to our near-term valuation target, coupled with the
reinstated regular quarterly cash dividend of $0.15 per share after a gap of
five years, which we deem sustainable and secure, represents annualized total
return potential of 26.5%.
Bear of the Day: Novatel Wireless (Nasdaq: NVTL)
Novatel did not provide any specific time frame, or visibility, when improved
opportunities from its new products can be derived. In addition, the market for
wireless data access equipment has recently become more competitive as several
large vendors launched innovative products with attractive pricing.
Novatel’s second quarter 2008 preliminary earnings
results were significantly below our estimates. We downgrade our recommendation
to a Sell as we assess appropriate signs for improved conditions.
Latest Posts on the Zacks Analyst
Blog:
H&R Block (NYSE: HRB)
We reiterate our Hold rating on shares of H&R Block following the
release of Q1 financial results. Although the fallout from the mortgage business
implosion will likely be felt for some time to come, and we continue to have
significant concerns regarding other aspects of HRB’s
business, we believe that negative and positive aspects of the company’s outlook are now roughly balanced. Steps have been taken by
the management to refocus the company on its core tax businesses, and the
emphasis on expense reduction should result in improved margins going forward.
Our price target of $23.50 per share represents a multiple of 15x our 2009 EPS
estimate.
NetEase.com, Inc. (Nasdaq: NTES)
NetEase.com is one of the leading providers of online gaming,
advertising, web-based communication services, and a variety of interactive
content in China.
NetEase is currently trading at 16.8x estimated 2008 EPADR of $1.56, a
discount to the industry. Rolling our valuation to fiscal 2009 EPADR estimate of
$1.74, the company is trading at 15.1x, which is far below the industry average.
NetEase faces intense competition in the gaming and advertising market. Delayed
product launches and growing operating expenses have hurt profitability.
Neurocrine Biosciences (Nasdaq: NBIX)
We have long stated that Neurocrine Biosciences’
stock is stuck in a tight trading range until investors get an update on
both elagolix and indiplon. We got the first update in early September when the
management released very positive phase II data from the PETAL study on GnRH
(gonadotropin-releasing hormone) antagonist elagolix. This encouraging data for
the treatment of endometriosis should lead to the signing of a major partnership
for pivotal trials in 2009.
As for insomnia drug indiplon, we assume the product is eventually
discontinued in the U.S. However, with elagolix now taking center stage,
Neurocrine is well positioned to outperform in 2009. We still believe that
investors can be patient while additional elagolix becomes available, but we are
moving our price target to $8, from $6, on the increased likelihood that a deal
for elagolix gets done in the next several months.
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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