Zacks Equity Research highlights Public Storage (NYSE: PSA) as the Bull of the Day and Pharmion Corp. (Nasdaq: PHRM) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on 3Com Corporation (Nasdaq: COMS) and Avon Products (NYSE: AVP). 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 Public Storage (NYSE: PSA). Shares of PSA have traded down about 17% since mid-April. We attribute this to a correction in the sector as investors are taking profits after multi-year gains. We think the sell-off has been overblown and PSA is still operating in an excellent environment for self-storage. The company continues to have strong earnings momentum, and as the economy strengthens, the company should see even greater returns. With the acquisition of Shurgard, PSA removed a major competitor, and is by far the largest self storage operator in the U.S. We are also encouraged by a slowdown in new supply coming on line in major markets.
Bear of the Day:
Our Bear of the Day recommendation is for Pharmion Corp. (Nasdaq: PHRM), a global pharmaceutical company focused on acquiring, developing and commercializing products for treating hematology and oncology patients. The company has two main growth drivers, Thalidomide and Vidaza. Yet sales of both are stalling in the face of fierce competition. Visibility remains low, in our opinion. The company has taken a few steps to improve the pipeline, but none of them will kick in until the end of 2007. Without acceleration in Vidaza prescriptions, the shares price will remain under pressure. Therefore, we maintain a Sell rating on Pharmion shares with a target price of $23.
Though 3Com Corporation (Nasdaq: COMS) has posted growth in its core networking business as well as in security products acquired from TippingPoint, we are cautious on the outlook of the company given the recent purchase of the H-3C joint venture. Following the transaction, 3Com's net cash position has fallen to $0.56 per share from $2.42 per share, which earlier supported the stock's valuation. Moreover, 3Com will likely compete head-to-head with Huawei after the non-compete agreement expires in 2008. We, therefore, reiterate our Sell recommendation on the shares of COMS with a target price of $3.50.
Avon Products (NYSE: AVP) stock has traded in a P/E range of 14 to 31 over the last five years. Avon is an above-average growth company among its peers, but there are inherent risks associated with the direct sales business model and the dependence on developing markets for growth. With China's outlook having improved, we find the stock attractive. The target price of $44.00 is derived from applying a 28 P/E on the depressed 2007 earnings estimate.
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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