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: Smith International, Inc. (NYSE: SII), WellPoint, Inc. (NYSE: WLP), Rent-A-Center, Inc. (Nasdaq: RCII), Sepracor Inc. (Nasdaq: SEPR) and News Corporation, Inc. (NYSE: NWS).
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Here are highlights from Wednesday’s Analyst Blog:
Smith Int'l Raises Guidance
Smith International (NYSE: SII) reported in-line third-quarter 2008 results. Net income rose 27% year-over-year to $211.9 million, driven by seasonal drilling recovery in Canada, higher U.S. distribution sales volumes and contributions from its W-H Energy acquisition, while revenue increased 27% to $2.85 billion.
The company also raised its fourth-quarter 2008 earnings outlook, aided by demand acceleration, price increases, cost discipline, and successful acquisition integration. The recent sell-off has made valuation even more compelling for this quality oilfield service name.
WellPoint Inc. in the Pink
WellPoint Inc. (NYSE: WLP) is the largest publicly traded commercial health benefits company, and the largest of the Blue Cross Blue Shield (BCBS) plan providers, in terms of membership in the U.S. The company reported 3Q08 net income of $820.7M (down 5.4% y/y), or EPS of $1.58, compared with net income and EPS of $868M and $1.44, respectively, in 3Q07.
Despite a challenging environment, WellPoint has managed to reduce its health benefit ratio on a sequential basis and report a modest increase in enrollments. We have lowered our price target to reflect management's lowered guidance, but maintain a Buy at current levels.
Rent-a-Center Lowers Outlook
Rent-A-Center's (Nasdaq: RCII) third quarter EPS missed our estimate by $0.03 and the consensus by $0.04. In addition, management lowered its outlook for the fourth quarter and for fiscal 2009. The company now expects to earn $2.01-$2.06 per share in 2008 (down from it previous guidance of $2.20-$2.30) and $2.10-$2.30 in 2009 (compared to $2.36 previously).
We are reducing our estimates by $0.13/share for 2008 and $0.24/share for 2009. We continue to find it difficult to get excited about the stock due to the weak consumer spending environment and the headwinds negatively affecting Rent-A-Center's core customer.
Sepracor Putting Cash to Work
Sepracor Inc. (Nasdaq: SEPR), headquartered in Marlborough, Massachusetts, is a research-based pharmaceutical company focused on the treatment of respiratory and central nervous system disorders. The company’s business fundamentals have been mixed over the past several quarters. Lunesta growth has been a disappointment, and with several new sleep medications coming to the market in the next few years, we see little that can be done to re-accelerate trends in the U.S.
As such, we find it hard to believe Sepracor’s stock will outperform while Lunesta treads water. Thankfully, we are pleased to see management looking to move beyond Lunesta and expanding its respiratory franchise with the recent additions or two new products and several technology licensing deals. Additionally, the mid-stage pipeline is progressing nicely. Near term, the best opportunity to re-accelerate the topline could come with the approval of eslicarbazepine acetate in early 2010.
News Corp. a Buy, Pre-Earnings
News Corporation, Inc. (NYSE: NWS) is a vertically integrated media company, well diversified geographically and operationally across all major markets and media platforms. We expect NWS to report 1Q09 financial results on November 7, 2008. The company's earnings conference call will be held on the same day at 11.00am EST.
Our current revenue and EPS estimates are $8,3000M and $0.34 respectively. Our Buy recommendation remains intact at current levels pending the 1Q09 earnings release. We believe NWS is among the most diversified operators in the sector, with significant interests in all major sub-segments (Filmed Entertainment, Television, Cable Network Programming, Direct Broadcast Satellite Television, Magazines and Inserts, Newspapers and Book Publishing).
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