Business Wire - Zacks Bull and Bear of the Day Highlights: 51job, Hewitt Associates, King Pharmaceuticals and Pride International
CHICAGO — Zacks Equity Research highlights 51job (Nasdaq: JOBS) as the Bull of the Day and Hewitt Associates (NYSE: HEW) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on King Pharmaceuticals (NYSE: KG) and Pride International (NYSE: PDE). 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:
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Our Bull of the Day recommendation is for 51job (Nasdaq: JOBS). 51job’s revenue growth rate rebounded to 18.2% in the fourth quarter of 2006 in spite of increasing competition in the China’s recruiting market. We think this is a sustainable growth rate for the company, and its gross margin continues to improve due to economies of scale. 51job continues to have the highest brand recognition both in the online and offline recruiting market in China. Moreover, China’s prosperous economy will continue to boost the recruiting market. Overall, we believe 51job is well positioned to leverage this market opportunity in China. Therefore, we are maintaining the Buy rating for the stock.
Bear of the Day:
Our Bear of the Day recommendation is for Hewitt Associates (NYSE: HEW). While Hewitt is the clear leader in the emerging human resources BPO (business process outsourcing) market, near term results continue to be negatively impacted by the up-front costs as the company develops this business niche. In addition, revenue declined in fiscal 2006, primarily due to the loss of the Bank of America contract. Lastly, the acquisition of Exult has compressed the company’s overall margin. The stock appears overvalued on depressed earnings from business development upfront costs; hence, the stock is rated a Sell.
Analyst Blog:
Most of King Pharmaceuticals’ (NYSE: KG) key products are either facing increased competition or generic threat. Additionally, we are concerned about declining prescription trends for most of these products. We believe that generic threat and mounting competition will continue to hinder both top- and bottom-line growth going forward. As such, we are maintaining our Sell rating with a $14 target. More than 70% of the company’s present revenue base is in danger of losing out to generic competition by 2009. Key products like Altace and Skelaxin are likely to face generic competition within the next 1-3 years.
Pride International’s (NYSE: PDE) fourth quarter results came in modestly lower that expected, reflecting higher costs from the Brazilian joint venture [JV] that was acquired during the quarter. While the U.S. Gulf of Mexico jack-up market is experiencing near-term softness, our medium to long-term outlook for the market remains favorable. We have lowered our 2007 EPS [earnings per share] estimate to $3.45 from $3.88, to reflect increased maintenance-related downtime for the fleet, and introduced our 2008 estimate at $4.82. The expected divestiture of its non-core Latin American assets is expected to be positive catalyst.
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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