Zacks Bull and Bear of the Day Highlights: GameStop, H&R Block, Smith & Nephew and Gerdau S.A

Business Wire, Nov 10, 2006

CHICAGO -- Zacks Equity Research highlights GameStop (NYSE:GME) as the Bull of the Day and H&R Block (NYSE:HRB) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Smith & Nephew (NYSE:SNN) and Gerdau S.A. (NYSE:GGB). Full analysis of all four stocks is available at http://at.zacks.com/?id=2676.

Here is a synopsis of all four stocks:

Bull of the Day:

Our Bull of the Day recommendation is for GameStop Corp. (NYSE:GME). We have been writing for about two years about the new video game cycle that was launched in November 2005 with the release of the Xbox 360. Later this month, Sony and Nintendo will launch their next generation systems, just in time for the holiday shopping season. We expect demand for these systems to be strong, and we believe GameStop is well-positioned to take advantage of this demand. GME is scheduled to report earnings on November 21, but we will be more interested in the company's update on business in the all-important fourth quarter. We maintain our Buy rating but increase our target price from $55 to $67, which is 25x our fiscal year 2007 EPS estimate.

Bear of the Day:

Our Bear of the Day recommendation is for H&R Block (NYSE:HRB). First-quarter earnings were negatively impacted by the deteriorating mortgage business, while competition remains intense in the tax business. The fact that the company may divest itself of its Option One Mortgage unit and focus its efforts on its core businesses is likely a long-term positive, but we do not believe that it resolves all of the issues currently facing the company.

Analyst Blog:

We are maintaining our Hold recommendation on Smith & Nephew (NYSE:SNN) after the company's third quarter results. Sales growth of 10% was satisfactory, but it remains to be seen whether the company's recent investments in people and products can bear any fruit. We think the stock's valuation is fair. SNN shares have a current P/E of 20.1 versus our generous earnings growth rate estimate of 10%, which gives the stock a P/E-to-growth ratio of 2.0.

We are changing our recommendation on Gerdau S.A. (NYSE:GGB) from Sell to Hold. The company posted better-than-expected third quarter results, and the outlook for its domestic business in Brazil remains promising. Also, international steel prices are still fairly high. However, we are still concerned that increasing production in China coupled with lower economic growth in the U.S. and continued sluggish growth in Europe increases the chances that steel prices might be reaching a cyclical peak.

Get the full analysis of all four stocks by going to http://at.zacks.com/?id=2649.

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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