Zacks Equity Research highlights Pozen, Inc. (Nasdaq: POZN) as the Bull of the Day and CSX Corporation (NYSE: CSX) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Marathon Oil (NYSE: MRO), Westamerica Bancorporation (Nasdaq: WABC) and Harmony Gold (NYSE: HMY). 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: Pozen, Inc. (Nasdaq: POZN)
Pozen and partner GlaxoSmithKline announced late this evening that the U.S. Food and Drug Administration (FDA) has approved Treximet for the acute treatment of migraine attacks with or without aura in adults. The news was as expected and results in a $20 million milestone from Glaxo ($10 million for approval and $10 million for the launch) to be recorded by Pozen in the second quarter of 2008. This should lead to profitability in the second quarter. We are maintaining our Buy rating and $18 near-term price target on the shares. We are buyers on this positive news.
Bear of the Day: CSX Corporation (NYSE: CSX)
We are maintaining our Sell rating on CSX Corporation due to valuation, as we believe the shares have been overbought and that CSX is expensive on a fundamental basis. That said, CSX had reported an excellent first quarter, with EPS before nonrecurring items up 60% year over year to $0.80, above the $0.74-$0.77 guidance provided by management on March 18 as well as our estimate, largely due to better-than-expected revenue growth. Revenues rose 12% due to unusually strong per unit pricing that increased 14% year over year and offset a 2% volume decline. We are raising our 2008 EPS estimate to $3.55, near the top of CSX guidance of $3.40-3.60, from $3.00, and initiating our 2009 estimate at $4.00. Improved efficiency, strong yields, and share repurchases should offset weakening volumes from a slowing economy and higher fuel costs.
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Marathon Oil (NYSE: MRO)
We are maintaining our Buy rating on Marathon Oil shares, but updating our estimates following recent guidance, continued downstream weakness and strong oil prices. Our new 2008 and 2009 EPS estimates are $5.95 (down from $6.20) and $7.10 (up from $6.59).
With its repositioned upstream asset portfolio and its best-in-class Midwest-focused downstream business, Marathon remains well positioned to capitalize on the continued favorable commodity-price environment. An attractive inventory of development projects will drive the company's high single-digit volume growth going forward.
Westamerica Bancorporation (Nasdaq: WABC)
First quarter 2008 diluted operating earnings of $0.76 per share for Westamerica (excluding VISA related benefits) were a penny ahead of our estimate and consensus. Top-line growth was supported by 26 bps increase in the net interest margin and the expenses remained well under control. The credit quality remained stable, but the growth continued to be elusive.
Though relative pricing looks quite expensive at the current levels, we think that the shares should continue to trade at a premium, based on WABC's superior capital levels, operating performance and credit quality compared to its peers, as also its potential as an acquisition target. We therefore maintain our Hold recommendation on the shares.
Harmony Gold (NYSE: HMY)
Harmony Gold is benefiting from higher gold prices. Going forward, Harmony is focused on reducing its overall operating costs through its CONOPS agreement and the shut down of loss-making shafts. The company is also reducing its headcount as a measure of cost control. As a result, we rate the shares a Hold with a target of $11.00.
In addition to underground and surface gold mining, Harmony is also engaged in related activities such as exploration, processing, smelting, and refining. Presently, HMY is the largest producer of gold in South Africa, producing about 30% of the country's annual gold output, and the fifth largest gold producer in the world.
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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