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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: Genentech (NYSE: DNA)
We are reiterating our rating on Genentech at Buy, and moving our target price to $90 / share. We remind investors that we upgraded the name in February 2008 based on the Accelerated Approval of Avastin for 1st-line metastatic breast cancer. Avastin sales in the second quarter were solid, and we expect the trend to continue well into 2009.
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 healthcare holding.
Bear of the Day: Primus Guaranty (NYSE: PRS)
We anticipate that higher provisions and mark-to-market losses due to challenging credit environment will impact the results in the coming quarters, though the company may be able to grow its credit protection business at attractive prices as the credit spreads continue to widen. Based on our concerns, we are maintaining our Sell recommendation on the shares of PRS and lowering our six-month target price to $2.50 per share.
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Power Integrations, Inc. (Nasdaq: POWI)
Power Integrations is an original equipment manufacturer (OEM) of semiconductor power conversion ICs. The California Energy Commission recently (CEC) pushed out an industry mandate that should create an earnings catalyst for the company in 2008. A solid product portfolio, new patents and product launches, along with the recently adopted worldwide energy standards should drive growth.
The timing and magnitude of the revenue growth, along with ongoing legal expenses are over hangs on the stock. We remain cautious and rate shares of POWI a Hold. We are setting a target price of $33.00, which corresponds to a P/E multiple of 22.0x.
Unibanco S.A. (NYSE: UBB)
We are retaining our Buy rating on Unibanco Uniao de Bancos Brasileiros S.A., the fourth largest private bank in Brazil. UBB represents a good value relative to its strong growth prospects and also vis-a-vis-Brazilian peers.
UBB will report second quarter results on August 8. We are raising our EPGDS estimates to $13.00 from $12.75 for 2008 and to $15.00 from $14.75 for 2009, due to a change in our foreign currency assumptions related to depreciation of the US$ against the Brazilian R$.
Amdocs, Ltd. (NYSE: DOX)
We maintain our Buy recommendation and the same valuation target for Amdocs Ltd., a leading provider of CRM and billing software for telecom carriers, as the company will shortly declare third quarter (ended June 30) fiscal 2008 financial results. We believe the long-run fundamentals for the company remain strong as Amdocs continues to benefit from large transformation projects at many telephone carriers requiring converged and consolidated network solutions.
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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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