February 07, 2008 at 06:00 AM EST
Zacks Bull and Bear of the Day Highlights: Arch Coal, Salix Pharmaceuticals, Rent-A-Center and Primus Guaranty

Zacks Equity Research highlights Arch Coal, Inc. (NYSE: ACI) as the Bull of the Day and Salix Pharmaceuticals (Nasdaq: SLXP) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Rent-A-Center, Inc. (Nasdaq: RCII) and Primus Guaranty (NYSE: PRS). Full analysis of all these 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 Arch Coal, Inc. (NYSE: ACI). Arch Coal reported better-than-expected fourth quarter earnings of $0.56 per share, beating our EPS expectations by 44%. Strong results were associated with the early start-up and Q4 contribution from the Mountain Laurel longwall, which doubled ACIs metallurgical and PCI sales, and will continue to boost margins in the region as well. The companys market-driven strategy has paid off as prices have remained near record levels and a significant portion of its 2008 and 2009 production is unpriced. This will allow the company to leverage their reserve base and should give them great momentum throughout 2008. We have upgraded ACI to Buy from Hold with a twelve-month target price of $53.00 per share. We have increased our Q1 and full-year 2008 estimates to $0.49 and $2.39 per share, respectively.

Bear of the Day:

Our Bear of the Day recommendation is for Salix Pharmaceuticals (Nasdaq: SLXP), 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 lead product Colazal. This is devastating news for Salix 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.

Analyst Blog:

Rent-A-Center, Inc. (Nasdaq: RCII) fourth quarter results were ahead of our estimates, and managements guidance for fiscal year 2008 was also above its previous guidance. The upside to its 2008 EPS guidance will come from cost savings associated with the company closing 280 stores. We bumped up our 2008 EPS estimates to reflect the store closings and established 2009 estimates. With the stock trading around 8x our 2008 EPS, the downside risk should be muted even if the company falls short of its earnings guidance. Even so, we maintain our Hold rating because the weak consumer spending environment is not likely to improve for several quarters.

Primus Guaranty's (NYSE: PRS) 4Q07 economic results were ($28.0) million, or ($0.62) per diluted share, substantially worse than the estimates. The miss mainly stemmed from a $40.9 million credit event provision. We anticipate that higher provisions and mark-to-market losses due to the challenging credit environment will continue to impact the results for 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.

Get the full analysis of all these 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.

About the Analyst Blog

Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today by visiting http://at.zacks.com/?id=2677.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.

The performance of the Zacks Rank portfolios for annual and year-to-date periods are the linked monthly total returns (price changes + dividends) of equal weighted hypothetical portfolios, consisting of those stocks with the indicated Zacks Rank, assuming monthly rebalancing and zero transaction costs. These are not the returns of actual portfolios. The hypothetical portfolios were created at the beginning of each month from January 1988 forward based on the values of the Zacks Rank available to Zacks' clients before the beginning of each month. The portfolios created monthly from 1988 through September 2006 exclude ADRs and are comprised of stocks that have the indicated Zacks Rank and were covered by at least two analysts at the time of the stocks inclusion in the portfolio. Starting in October 2006 and going forward, the portfolios are comprised of all stocks with the indicated Zacks Rank and do not exclude ADRs, which is more reflective of the list of stocks that customers will find on the Zacks web sites. These performance numbers have been audited from 1995 through 2003 by Virchow, Krause & Company, LLP.

Contacts:

Zacks.com
Terry Ruffolo
Media Relations
312-265-9213
Visit: www.zacks.com
Stock Market XML and JSON Data API provided by FinancialContent Services, Inc.
Nasdaq quotes delayed at least 15 minutes, all others at least 20 minutes.
Markets are closed on certain holidays. Stock Market Holiday List
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
Press Release Service provided by PRConnect.
Stock quotes supplied by Six Financial
Postage Rates Bots go here