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Business
Zacks Bull and Bear of the Day Highlights: Scientific Games, The St. Joe Company, FedEx Corp., Shire Limited and Freddie Mac
© Business Wire 2008
2008-10-08 12:12:02 - - Zacks Equity Research highlights Scientific Games (Nasdaq: SGMS) as the Bull of the Day and The St. Joe Company (NYSE: JOE) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on FedEx Corporation (NYSE: FDX), Shire Limited (Nasdaq: SHPGY) and Freddie Mac (NYSE: FRE).
Full analysis of all these stocks is available at
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Here is a synopsis of all five stocks:
Bull of the Day: Scientific Games (Nasdaq: SGMS)
Scientific Games has a leading position in several markets, including the instant ticket and online lottery markets. In addition, Scientific Games continues to win significant contracts in both the instant ticket and online lottery markets from both domestic and international lottery authorities.
Also, the company has made several acquisitions that have accelerated top-line growth. Ron Perelman, a world-renowned private investor, owns 28.1% of the company's stock. The Buy rating is maintained.
Scientific Games is currently selling at 20.6 times trailing 12 month earnings. Over the last few years, the stock has traded in a wide P/E range of 16 to 38. The stock traded with a significant P/E premium as a result of the company's leading market position. The six-month target price of $33.50 is based on a 30 P/E multiple on 12-month trailing earnings.
Bear of the Day: The St. Joe Company (NYSE: JOE)
The St. Joe Company, a publicly held, operationally diverse real estate company, is based in Jacksonville, Florida. It is one of Florida's largest real estate developers. JOE is engaged in town, resort, commercial and industrial development in addition to land sales and commercial real estate operations. The company also has significant interests in the timber industry.
JOE continues to reduce headcounts and cap ex spending in response to a rapidly deteriorating residential Florida real estate market. In addition, the company has responded by paying off most of its debt which will allow the company to hold lots instead of selling into a depressed market.
There are no signs that the housing situation will get better in the next six months and we think the worst is yet to come. Near term, we would stay away from companies with exposure to the residential building business. While we think the company is a good long term investment due to its extensive land holdings in one of the fastest growing states, we are changing our near term recommendation to Sell.
Latest Posts on the Zacks Analyst Blog:
FedEx Corporation (NYSE: FDX)
We are maintaining our Hold on FedEx, but cutting our target price to $80. FDX will report second quarter results on December 18. We are retaining our fiscal 2009 (May 31) diluted EPS estimate at $5.25, the high end of FDX diluted EPS guidance of $4.75-5.25, as well as our fiscal 2010 estimate at $6.00.
Fuel surcharges will lag high fuel costs, and the weak economy will hurt LTL ("less-than-truckload") freight, US express, and copy services. Remedial actions include cost-control measures and cuts in capital spending.
Shire Limited (Nasdaq: SHPGY)
Shire Limited is a specialty pharmaceutical company focused on three therapeutic areas: Central nervous system (CNS), gastro intestinal (GI), and renal disorders. Based in England, the company has operations in the U.S., Canada, France, Italy, Spain, and Germany. Shire Limited trades in the U.S. as an American Depository Receipt (ADR).
The company's ADHD (attention deficit hyperactivity disorder) franchise continues to perform very well, increasing market share to over 32%. Vyvanse, the company's new flagship ADHD product, continues to perform well and will be the key driver of the top-line.
Freddie Mac (NYSE: FRE)
The shares of Freddie Mac have been extremely volatile over the past few weeks, since the U.S. federal regulators outlined their takeover plans for the two GSEs, trading between $0.25 per share and $2.95 per share.
We anticipate the volatility to continue as the market looks for further information on the future structure of these companies and their role in the housing markets. Further, as the housing situation continues to worsen, we anticipate higher losses and write-offs in the coming quarters. While there may be some trading opportunities on certain days due to the volatility, we would caution the investors that the risks associated with this stock currently outweigh any potential reward and thus it would be safer to stay away.
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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.
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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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Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Zacks.com
Mark Vickery
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