2008-09-02 12:03:01 -

- 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: Grey Wolf, Inc. (NYSE: GW), Precision Drilling Trust (NYSE: PDS), Public Storage (NYSE: PSA), ATA, Inc. (Nasdaq: ATAI) and PetSmart, Inc. (Nasdaq:

PETM).

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Here are highlights from Friday's Analyst Blog:

Grey Wolf a Buy on Precision

Grey Wolf, Inc. (NYSE: GW) has agreed to be acquired by Precision Drilling Trust (NYSE: PDS) in a cash and stock valued at approximately $2 billion. Grey Wolf shareholders will own approximately 25% of the combined entity, to be called Precision Drilling.

In particular, the GWPDS merger creates a North American land drilling powerhouse with 371 drilling rigs. In addition to getting the significant cash payout, GW shareholders benefit from Precision's high-tech systems and technology. While we expect GW shares to essentially track PDS from here onwards, we are keeping our Buy recommendation and price objective unchanged.

Public Storage Doing Good Biz

Operationally, Public Storage's (NYSE: PSA) properties continue to perform relatively well; same-store NOI (net operating income) and rental rates increased in most of the company's US and European markets.

We expect moderate same-store growth to continue throughout the year. In 2Q08, PSA sold 51% of its stake in Shurgard Europe to the New York Common Fund, which will have a negative impact on near-term FFO (funds from operations). Although, the company has plenty of cash to be an active acquirer in a market where pricing for self storage facilities are more attractive.

ATA, Inc. a Chinese Hold

We maintain our Hold rating on shares of ATA, Inc. (Nasdaq: ATAI) following the release of first-quarter financial results. We believe that shares of ATAI appropriately reflect the opportunities and weaknesses inherent in the company's business at this time. Although we project substantial increases in revenue and earnings next year, we note that the company is still in the early stages of its growth.

We note that the recently completed fiscal year 2008 was the first full-year of profitability for the company. The shares currently trade at a slight premium to a peer group of education services companies. Given the outlook for expanding growth, the company must execute its business plan without significant missteps to justify a premium multiple.

PetSmart Trades at Fair Value

PetSmart, Inc. (Nasdaq: PETM) reported better-than-expected second quarter results. It had sales of $1.242 billion, $22 million above consensus, and EPS of $0.30, $0.02 ahead of consensus. The company also reiterated full-year EPS guidance of $1.51-$1.59 and issued EPS guidance of $0.25-$0.29 for the third quarter. We think that the management is setting the expectations bar at an attainable level.

As such, we are slightly raising our estimates for the third and fourth quarters. Our fiscal 2008 EPS estimate goes from $1.49 to $1.52, which is at the low end of PetSmart's guidance. We think the current macroeconomic situation will force consumers to increase savings in order to service or pay down current debt. As consumers increase savings, consumption will decline, and that will put additional pressure on retailers. We maintain our Hold rating on PETM shares, as the valuation still looks fair.

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