2008-10-13 12:12:01 -

- Zacks Equity Research highlights Johnson & Johnson (NYSE: JNJ) as the Bull of the Day and Carmike Cinemas, Inc. (Nasdaq: CKEC) as the Bear of the Day.

Full analysis of all these stocks is available at at.zacks.com/?id=2676.

Here is a synopsis of all five stocks:

Bull of the Day: Johnson & Johnson

(NYSE: JNJ)

Johnson & Johnson is one of the world's largest providers of healthcare products in the consumer, pharmaceutical and medical devices market. It has over 200 operating companies around the world and sells its products in more than 175 countries. J&J has an enormously diverse revenue stream consisting of market leading products in all three of its business segments.

Due to a number of products expected to experience declining sales, revenue growth in the next few years will likely slow relative to 2007. Incremental earnings growth will come in the form of improving margins and share buybacks. J&J's consistency, product diversity and financial stability make it a very attractive holding in this turbulent market.

We are upgrading our recommendation from Hold to Buy based on the stock's attractive valuation and strong company fundamentals. Our price target is $70.

Bear of the Day: Carmike Cinemas, Inc. (Nasdaq: CKEC)

Carmike Cinemas faces a difficult operating environment, along with its own financial challenges. Although the company has had success with recent ticket price increases, the gains have not been sufficient to offset declining attendance. We do not expect material share price appreciation from current levels and are initiating coverage on shares with a Sell rating.

The Columbus, Georgia-based company's current balance sheet leaves it with little financial flexibility. The overwhelming majority of the company enterprise value is comprised of debt, and the management recently suspended the quarterly dividend to focus on reducing leverage. While we believe that this was a wise strategic move, the management must be diligent in ensuring that the company does not violate any existing debt covenants going forward.

In light of the negative economic outlook, we believe that the company has a limited margin for error in executing its operating strategy. Further, we currently project that Carmike will post declines in both EBITDA and Theatre Level Cash Flow in 2008, while once again generating net losses.

Our price target of $3 equates to an EBITDA multiple of approximately 6.5x our 2008 EBITDA estimate and approximately 5x our estimated 2008 Theatre Level Cash Flow. While these multiples represent discounts to Carmike's larger peers, we believe it is appropriate, given the company's business strategy and financial position.

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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.

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Mark Vickery
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