Zacks Equity Research highlights Matria Healthcare (Nasdaq: MATR) as the Bull of the Day and Overstock.com (Nasdaq: OSTK) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Peabody Energy (NYSE: BTU) and Photronics (Nasdaq: PLAB). Full analysis of all these stocks is available at http://at.zacks.com/?id=2676.
Here is a synopsis of all four stocks:
Bull of the Day:
Our Bull of the Day recommendation is for Matria Healthcare (Nasdaq: MATR). MATR recently announced it had been awarded two new health enhancement accounts and that two of the company's existing accounts have expanded the Matria programs and services provided to their employees. When services are fully implemented, the estimated aggregate annualized value of the new and expanded awards totals approximately $9.1M. The company anticipates the new agreements to commence in 1Q08. We maintain a Buy recommendation at current levels, pending the release of 3Q07 financial results.
Bear of the Day:
Our Bear of the Day recommendation is for Overstock.com (Nasdaq: OSTK). Overstock.com reported third quarter sales of $162 million and a net loss of $0.15 per share. The results were in line with our estimates. The company’s cost-cutting efforts resulted in positive EBITDA in the third quarter. Even so, we would use the recent gains in the company’s stock price to exit positions. While the company reduced its cost structure, it still has not shown that it can control its costs while simultaneously growing its top line. Moreover, we believe that when the company attempts to accelerate its sales growth, its operating costs will climb well above current levels. Given OSTK’s razor-thin margins, any up tick in operating expenses will prevent the company from turning a profit. We maintain our Sell rating and $10 target price.
Analyst Blog:
We have increased our target price on Peabody Energy (NYSE: BTU) shares to $50 from $43, but have maintained our Hold rating on the company. Near-term upside will be achieved through the company's spin-off of Patriot Coal Co. This vehicle will hold the company's legacy Appalachian properties and will enable greater management focus on eastern acquisitions. In the longer-term, we see continued headwinds for the coal-mining industry. Namely, there is excess coal capacity that could potentially be brought online and there is near-term uncertainty surrounding carbon-cap legislation. We have adjusted our third quarter estimate downward to $0.33 vs. $0.57 previously.
Photronics (Nasdaq: PLAB) is an OEM [original equipment manufacturer] of photomasks used by the semiconductor manufacturing industry in the fabrication of IC [integrated chip] devices and LCD displays. In the July quarter the top-line results were weak as a result of weakness in flat panel display. Since foundries build-in their own photomasks in the larger geometries, the more advanced nodes are that much more important. The company has strong technical development capabilities, and is experiencing growth in its 130nm and 90nm product lines. In the near term, this growth will not outshine a maturing legacy product and soft markets. Consequently, we rate shares of PLAB a Sell.
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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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.
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