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

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

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.

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Terry Ruffolo
Media Relations
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