For Immediate Release
Chicago, IL - November 28, 2011 - Zacks Equity Research
highlights
Salix Pharmaceuticals
(
SLXP
) as the Bull of the Day and
Montpelier Re Holdings
(
MRH
) as the Bear of the Day. In addition, Zacks Equity Research
provides analysis on
Wal-Mart
(
WMT
),
Macy's
(
M
) and
Best Buy
(
BBY
).
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
:
Salix Pharmaceuticals
(
SLXP
) third quarter results exceeded expectations with higher revenues
boosting performance. With the company raising its revenue
guidance, we have raised our estimates as well. Salix is
well-positioned for growth in the gastrointestinal market.
We believe lead product Xifaxan will continue to experience
solid, above-market trend growth given its safety profile and lack
of systemic absorption. We were pleased to see Xifaxan gain
approval for the hepatic encephalopathy indication, as we believe
that the main potential for Salix lies in gaining approval for
additional indications for Xifaxan.
Meanwhile, we are pleased to see the company expanding its
pipeline through in-licensing deals and acquisitions. We expect the
company to continue pursuing suitable in-licensing opportunities in
order to grow revenues. We believe the current price represents an
attractive entry point for long-term investors and maintain our
Outperform recommendation on the stock.
Bear of the Day
:
We are downgrading
Montpelier Re Holdings
(
MRH
) to Underperform from Neutral on the back of loss reported in the
third quarter results. Montpelier Re Holdings' operating loss came
in much wider than the Zacks Consensus Estimate, led by catastrophe
losses, resulting from Hurricane Irene and the Texas wildfires,
U.S. regional aggregate covers and July's Danish floods.
The loss ratio in the third quarter was 89% compared with 33.3%
in the year-ago quarter. Results include $60 million of catastrophe
losses partially offset by $18 million of favorable prior year loss
reserve movements. The current pricing environment in the primary
insurance market and the stressed economy are expected to restrict
the top-line growth.
Our six-month target price is $16.00. This price target along
with the annual dividend of $0.40 implies a negative return of 6.1%
over that period. This is consistent with our Underperform
rating.
Latest Posts on the Zacks
Analyst Blog
:
Italy
's Boot Overshadows Retail Kickoff
Investors will be unable to shake off Italy-related concerns
even as the holiday shopping season gets underway today with
enticing Black Friday deals. Trading volumes will likely remain
thin today, given the abbreviated trading session and the absence
of any major economic reports. Don't forget, however, that low
trading volumes have a way of exaggerating volatility.
In its latest bond auction, Italy was forced to pay Euro-era
record high interest rates to attract investors. The country was
able to sell €8 billion in six-month treasury bills, but only after
paying an average yield of 6.5%, sharply up from the roughly 3.5%
yield it paid for the same maturities in October. Yields on two and
five-year Italian government bonds jumped to 7.7% and 7.8%, while
the 10-year bond moved further above the 7% level to a new high of
7.3%. For context, keep in mind that Uncle Sam is paying less than
2% on 10-year bonds.
The inverted Italian curve -- higher yields on shorter duration
bonds compared to long-term instruments -- highlights the market's
anxiety about the country's near-term financial profile. Despite
these extremely high funding costs, Italy is still able to access
the bond market to roll over its maturing debt. But escalating
yields are adding to an already precarious fiscal situation by
increasing the country's debt-service liabilities. Thursday's
statement by German Chancellor Angela Merkel strongly rejecting the
demand for issuance of common Euro-zone bonds was the trigger for
the renewed pressures on Italian bonds.
In corporate news,
focus
will be on retailers like
Wal-Mart
(
WMT
),
Macy's
(
M
) and
Best Buy
(
BBY
) due to Black Friday-related headlines.
Approximately 34% of consumers are expected to shop on Black
Friday, up from last year's 31%, according to the International
Council of Shopping Centers. The total number of people shopping
over the long weekend is expected to be up 10% from last year,
estimates the National Retail Federation. It is too early to
handicap the holiday shopping season, but given the improving
economic backdrop, some early optimism may not be altogether
misplaced.
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.
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
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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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BEST BUY (
BBY
): Free Stock Analysis Report
MACYS INC (
M
): Free Stock Analysis Report
MONTPELIER RE (
MRH
): Free Stock Analysis Report
SALIX PHARM-LTD (
SLXP
): Free Stock Analysis Report
WAL-MART STORES (
WMT
): Free Stock Analysis Report
Zacks Investment
Research