Zacks Analyst Blog Highlights: Eli Lilly and Company, Pfizer, Orbital Sciences and Everest Re

Business Wire, April 26, 2006

CHICAGO -- 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: Eli Lilly and Company (NYSE:LLY), Pfizer (NYSE:PFE), Orbital Sciences (NYSE:ORB) and Everest Re (NYSE:RE).

See the latest posts to the Analyst Blog by visiting http://at.zacks.com/?id=2673

Here are highlights from Tuesday's Analyst Blog:

Bullish on Eli Lilly

Eli Lilly and Company (NYSE:LLY) is one of the world's largest pharmaceutical companies. Lilly products treat depression, schizophrenia, attention-deficit hyperactivity disorder, diabetes, osteoporosis and many other conditions. Lilly has one of the best pipelines in the industry, in our view. New products should drive above-industry-average growth over the next few years. We think investors should establish a position in the shares before what we believe will be a very positive next few quarters. We rate the shares a Buy with an aggressive $66 price target.

We believe that Cymbalta will be the driving force for Lilly's top-line over the next few years. Recent data presented by Lilly demonstrated that Cymbalta reduced symptoms of depression at least as fast as Forest Lab's Lexapro by the end of two weeks. We believe this data will help drive trends in the depression market toward the newer serotonin and norepinephrine (SNRI) products such as Cymbalta and Effexor over the older SSRI products such as Zoloft and Lexapro. Additionally, Cymbalta offers the best potential to treat the physical symptoms of depression such as neuropathic pain and fibromyalgia in our view. This gives the product an advantage over generic products such as Prozac, Celexa, and Paxil.

Erectile Dysfunction (ED) drug Cialis also looks strong, with a 26% (March 2006) market share in the U.S. Cialis is now the number one prescribed ED drug in eleven countries outside the U.S. We believe that Cialis will continue to pick up market share from Pfizer's (NYSE:PFE) Viagra in 2006.

ORB a Play on Defense Growth

The improved outlook for Orbital (NYSE:ORB) - in our view - reflects relatively constant demand for small space-technology systems in missile defense, spaced-based military, and intelligence operations. Furthermore, the company's strong order backlog position and new order outlook, combined with strong free cash flow and expectations for operating income growth are collectively expected to boost earnings growth and P/E multiple expansion, going forward. Accordingly, we maintain our BUY recommendation on ORB common stock with a six-month target price of $16.75. Price appreciation to our near-term valuation target - with no dividend - represents annualized total return potential of 19.4%.

Orbital's launch vehicles segment, which has been benefiting from the Ground-based Midcourse Defense (GMD) contract to supply Boeing with booster vehicles, is likely to be the company's primary revenue growth driver over the next couple of years. The recently announced seven-year contract, expected to be worth more than $200 million for Pegasus and Taurus rockets received by ORB from NASA under the NASA Launch Services program, bodes well for the company's outlook. With their superb track record of repeated success, the Pegasus and Taurus rockets continue to be the vehicles of choice for NASA's upcoming small-satellite scientific missions for at least the next five years.

Everest Re at Fair Value

Sporting a strong balance sheet, Everest Re (NYSE:RE) is well positioned to benefit from the expected hardening in the market. However, just over one-quarter of the company's business is in property lines, which we expect to enjoy the biggest price increases. The majority of Everest's business is in casualty lines, where we expect pricing and conditions to stabilize after several quarters of deterioration, but not to harden dramatically. Moreover, potential excess capital flows into the property re market from insurers and hedge funds could dampen expected price increases. At current valuations, we think Everest Re is fairly valued.

The company is set, in our view, to re-accelerate its premium and earnings growth in 2006. Everest Re can capitalize on what we believe will be a hurricane-related hardening in certain segments of the market. Industry-wide, price increases are occurring in the most affected lines, primarily property reinsurance, primary property, marine and energy, and price declines are slowing in casualty lines. Although the hurricanes wiped-out more than 25%, or $1.0 billion, from the company's book value, which currently stands at $4.3 billion, Everest Re remains well capitalized, having issued $280 million in common stock. Prior to the hurricanes, the company was writing premiums at a ratio of 1.1 times its equity, a level that has declined to 0.9x, which should leave it room for double-digit premium growth, despite a tightening of capital requirements for catastrophe lines by the rating agencies.