CHICAGO - (Business Wire) Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include:
Forest Oil Corporation (NYSE:
FST),
Salix Pharmaceuticals Limited (Nasdaq:
SLXP),
Genentech, Inc. (NYSE:
DNA),
Waddell & Reed Financial Inc. (NYSE:
WDR) and
Quicksilver Resources (NYSE:
KWK).
See the latest posts to the Analyst Blog: http://www.zacks.com/blog/post_info.html?g=6
Here are highlights from Friday’s Analyst Blog:
Forest Oil Improves, Stays a Hold
We are maintaining our Hold recommendation on Forest Oil Corporation (NYSE: FST) shares ahead of the company’s first quarter results. The company’s recent results have benefited from the Houston Exploration Company acquisition. Forest ended 2007 with 2.1 Tcfe of proved reserves representing a reserve replacement rate of 236% at a cost of $2.21 per Mcfe.
On April 1, Forest Oil announced a new natural gas discovery in Canada and a bolt-on acquisition in the Ark-La-Tex area. The discovery is the Utica Shales, located in Quebec, Canada. This recent success in Utica Shale bodes well for the company's long-term organic growth prospects. We are raising our estimates to reflect higher commodity prices and contribution from recent acquisitions.
The company has accumulated approximately 269,000 net acres in the area over the last two years, where it drilled two vertical wells in 2007 and plans to drill three horizontal wells in 2008. The company estimates that the resource potential of the area is around 4 Tcfe. First production is expected in 2009, with the potential for a full-scale development program in 2010 and beyond.
Generics Gouging Salix Pharma
Salix Pharmaceuticals Limited (Nasdaq: SLXP) is a specialty pharmaceutical company engaged in acquiring, developing and commercializing prescription drugs used in the treatment of a variety of gastrointestinal diseases. The company suffered a major setback in December 2007 when the FDA granted approval to three generic versions of the company’s lead product, Colazal.
This is devastating news for Salix. The company will lose a major part of its revenues and earnings as Colazal was a significant contributor to both the top-and bottom-line.
As such, we expect 2008 to be an extremely challenging year for the company with a significant decline in both revenues and earnings. Based on our new model, we see substantial decline in both earnings and revenues in 2008. While revenues should decline almost 34% to $178 million, we expect EPS to decline 227% to $1.12.
Blockbuster Potential for DNA
We are reiterating our Buy rating on Genentech, Inc. (NYSE: DNA) and keeping our target price at $86 per share. We remind investors that we upgraded the name in February based on the accelerated approval of Avastin for first-line metastatic breast cancer. Our EPS forecasts for 2008 through 2012 have been adjusted higher based on expected higher sales of Avastin going forward. We are also encouraged by the recent positive data on Rituxan in multiple sclerosis (MS).
Genentech is the world's premier biotechnology company. The stock has struggled over the past several quarters. However, the pipeline is solid and with renewed Avastin and Rituxan growth, the valuation looks very attractive at this level. We view the name as a core holding.
Waddell & Reed a Near-Term Hold
We are initiating coverage on the shares of Waddell & Reed Financial Inc. (NYSE: WDR) with a Hold rating and a six-month target price of $34.00 per share. WDR is one of the oldest mutual fund and asset management companies in the U.S., with almost $65 billion assets under management. WDR's assets have grown by more than 175% from $23 billion during the last 10 years.
The company reported impressive results for fourth quarter and fiscal year 2007. During the quarter, WDR reached record sales levels in all of its operating channels, despite adverse market conditions. Though the company's fundamentals call for a higher than Hold rating; given the current uncertainties related to the financial sector, we will look for a more opportune time to upgrade the recommendation.
Quicksilver Quickly Hits Target
Due to the recent run up in share price, Quicksilver Resources (NYSE: KWK) has reached our price target and we have changed our current recommendation from a Buy to a Hold. Quicksilver's story is still very compelling and nothing fundamental has changed about the companies operations or ability to grow in the near term via the Barnett shale play of North Texas. Our recommendation change is solely of function of share price.
If the price pulls back around the $36.00 per share range, we recommend buying the stock. We will be updating our report in a few weeks time when the company reports first quarter 2008 earnings. We estimate that KWK will report Q1 earnings of $0.26 per share, and we see full-year 2008 earnings coming in at $1.16 per share.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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