2008-10-07 12:21:01 -
- 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: Sanofi-Aventis S.A. (NYSE: SNY), Highwoods Properties, Inc. (NYSE: HIW), SRS Labs, Inc. (Nasdaq: SRSL), Universal Technical Institute, Inc. (NYSE: UTI) and Moody's
Corp. (NYSE: MCO).
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Here are highlights from Monday's Analyst Blog:
Sanofi: Long-Term Generic Impact
Sanofi-Aventis ADR (NYSE: SNY), located in France, develops and manufactures pharmaceutical products, primarily for sale in the prescription drug market. The company, which has global operations, focuses on major therapeutic areas such as cardiovascular, central nervous system, oncology and internal medicine formulations. Combined, Sanofi-Aventis is the third largest pharmaceutical company in the world in terms of revenues.
While valuation on the combined company is reasonable, we would like to see more visibility on the potential longer-term impact of generics before we recommend buying the shares. We rate the shares a Hold with a $38 price target.
Highwoods Ppys in Tough Market
Highwoods Properties, Inc. (NYSE: HIW) is a fully integrated, self-administered real estate investment trust (REIT) that owns or has management interests in office, industrial, retail, and service center properties, including development projects and apartment units. Operationally, the company's properties are performing relatively well; most operating metrics increased in the 2nd quarter and the company is covering is dividend with operating cash.
However, the U.S. economy is rapidly declining and office/industrial owners will get hit the hardest due to continued job losses. We think operations will weaken, and suburban office owners will have difficulty maintaining occupancy and increasing rents.
SRS Labs Looking Down the Road
SRS Labs, Inc. (Nasdaq: SRSL) develops and licenses audio technologies to OEMs (original equipment manufacturers) in the home entertainment, portable media device, personal telecom, computing, automotive and broadcasting markets. SRS secured nine wins in the last quarter four in home entertainment, three in portable media devices and two in PCs.
June quarter results, however, were short of consensus estimates, on both the top and bottom lines. Competition remains fierce, and we are apprehensive that the company may not be able to protect and market its IP (intellectual property). We are reiterating our Hold rating on SRSL shares.
Universal Tech Institute Neutral
Universal Technical Institute, Inc. (NYSE: UTI) is a leading provider of post-secondary technical education. The company offers undergraduate degree, diploma and certificate programs at ten campuses throughout the U.S. for students seeking careers as professional automotive, diesel, collision repair, motorcycle and marine technicians.
Declining revenues, a declining capacity utilization rate, and lower student enrollment continue to pressure both the operating margin and earnings. However, with the stock discounting most of the adverse developments and trading at a historically low valuation level, Universal Technical Institute is rated a Hold.
Moody's Own Cautious Outlook
Moody's Corp. (NYSE: MCO) has a solid franchise in the rating of debt instruments, and has diversified itself with credit research and international growth. This has helped the New York-based company offset declining ratings revenues, which fell 35% in the first half of 2008. However, Moody's still remains cautious about the recovery in the credit market for the remainder of the year.
The current credit crunch is impeding the U.S. economy, which may likely experience a recession as consumer confidence declines. The Federal Reserve has cut rates, however, many people have been shut out of the mortgage market and investors in subprime debt have dried up. Moreover, with inflation concerns, rates are likely to rise from current levels.
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