Zacks Equity Research highlights Royal Caribbean Cruises (NYSE: RCL) as the Bull of the Day and VeraSun Energy (NYSE: VSE) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Biogen Idec, Inc. (Nasdaq: BIIB) and Shanghai Petrochemical (NYSE: SHI). Full analysis of all four 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 Royal Caribbean Cruises (NYSE: RCL). Although the current top-line environment remains challenging, we consider RCL to be poised to strongly benefit given an increase in demand. We believe that growth in the second half of the year will be more attractive. With the shares currently trading at 13.5x our 2007 earnings estimate and a 15% discount to its largest rival, we consider this to be an attractive entry point.
Bear of the Day:
Our Bear of the Day recommendation is for VeraSun Energy (NYSE: VSE). We are reducing our rating on shares of VeraSun to Sell and adjusting our six month target price to $18. While VSE has very favorable top-line growth prospects due to its recent and planned capacity expansions, we have a negative outlook on the long-term future of the industry as a whole. Namely, there are very few barriers to entry and producers are subject to corn, natural gas, and oil price fluctuations. Due to upward corn and downward ethanol pricing pressure, current year EPS is likely to be significantly lower, comparably. Full-year 2007 EPS is expected at $0.61 per share, and 2008 EPS is expected at $1.14.
Analyst Blog:
We are now recommending investors hold their position in shares of Biogen Idec, Inc. (Nasdaq: BIIB). The core business is performing well, and Tysabri has re-launched in both the U.S. and several European countries. Additionally, Biogen's solid financial situation makes the company an attractive partner. However, the company's long-term situation is a bit unclear given the heavy reliance on two mature products in Rituxan and Avonex, and readjusted expectations for Tysabri. The company will need success with several mid-to-late stage pipeline candidates to return to impressive growth starting in 2009. At this time we believe investors can be patient with the shares and our valuation model shows a fair price around $52 per share.
Shanghai Petrochemical's (NYSE: SHI) exposure to the fast-expanding Chinese economy and strong petrochemical product demand make us confident of strong volume growth. However, volatility in crude oil prices and intense competition may affect SHI's profitability in the long run. Earnings in the first quarter of 2007 increased year-over-year due to lower crude oil processing costs. We believe this trend will continue in 2007 and improve profitability. Thus, we rate the stock a Hold.
Get the full analysis of all four 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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