Zacks Bull and Bear of the Day Highlights: GameStop, Supertex, Town Sports International and National Oilwell Varco

Business Wire, August 27, 2007

CHICAGO -- Zacks Equity Research highlights GameStop (NYSE: GME) as the Bull of the Day and Supertex (Nasdaq: SUPX) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Town Sports International (Nasdaq: CLUB) and National Oilwell Varco (NYSE: NOV). 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 (NYSE: GME). GameStop's second quarter results easily beat our sales and earnings estimates and demonstrate that the current video game cycle is still going strong. Moreover, we believe that GameStop is well-positioned to take advantage of this product cycle, which should last for the next few years. That's because no matter which game console or software titles eventually win out, GameStop will succeed by selling the most popular consoles and titles in its stores. All told, GameStop remains one of our favorite stocks in the retail sector. We reiterate our Buy rating and increase our target price from $45 to $60, which represents a P/E-to-growth ratio of 1.25x our fiscal 2008 EPS estimate.

Bear of the Day:

Our Bear of the Day recommendation is for Supertex (Nasdaq: SUPX). Supertex reported fiscal Q1 revenue below our estimate of $23 million. GAAP EPS of $0.32 came in line with our earlier estimate. Revenues were down 9% sequentially and 16% y/y. Pro-forma gross margin improved by 390 bps compared to the prior quarter, mainly owing to better mix and an inventory build. Motorola's share of Q2 revenue declined to below 10% compared to 20% earlier. While medical business improved 9% q/q, the company's imaging business fell again by 11% (after receding 10% in the prior quarter). Management is projecting Q2 revenue flat to moderately up, given poor visibility in the handset market. We have adjusted Q3 and fiscal 2008 revenues down, reflecting management's lack of enthusiasm. We maintain our Sell rating and target price of $31.

Analyst Blog:

We are initiating coverage on shares of Town Sports International (Nasdaq: CLUB) with a Buy rating and a price target of $24.00. Given the solid fundamentals in the fitness club industry and the company's track record of operational success, we anticipate that CLUB will continue to deliver strong financial results going forward. CLUB is a leader in the markets in which it operates, including the metro areas of New York, Boston, Washington DC and Philadelphia. We believe that the company's strategy of clustering locations throughout a metro area provides a strong competitive advantage. Our price target implies a multiple of approximately 7.5x projected '08 EBITDA [earnings before interest, taxes, depreciation and amortization].

Given its strong late-cycle leverage, National Oilwell Varco (NYSE: NOV) remains one of our core oilfield machinery plays on the current cycle. With demand for the company's integrated rigs and other drilling-related consumables expected to remain robust over the coming years, both domestically as well internationally, National-Oilwell Varco remains well positioned to capitalize on the current favorable macro backdrop. And with a current backlog of $7.2 billion, up from $6.4 billion at the end of previous quarter, visibility on the company's long-term earnings growth remains strong. At the end of the quarter, the company had cash on hand of $1 billion and long-term debt of $850.7 million.

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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