Zacks Bull and Bear of the Day Highlights: PeopleSupport, Builders FirstSource, Cephalon and Business Objects

Business Wire, March 22, 2007

CHICAGO -- Zacks Equity Research highlights PeopleSupport (Nasdaq: PSPT) as the Bull of the Day and Builders FirstSource (NYSE: BLDR) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Cephalon, Inc. (Nasdaq: CEPH) and Business Objects (Nasdaq: BOBJ). 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 PeopleSupport (Nasdaq: PSPT). PeopleSupport is well positioned to benefit from the fast-growing offshore BPO (business process outsourcing) market. The company's rapid revenue growth and investments production capacity in the Philippines and Costa Rica resulted in a negative earnings surprise and significant near-term margin contraction. The news drove the stock down to reasonable valuation levels as earnings momentum investors exited their stock positions. As the long-term prospects seem promising and the stock appears to be attractively valued at current levels, the stock is upgraded to a Buy.

Bear of the Day:

Our Bear of the Day recommendation is for Builders FirstSource (NYSE: BLDR). We are initiating coverage of Builders FirstSource with a Sell rating and a target price of $14. Our negative view stems from the company's prospects being directly tied to new residential construction in the U.S. The headwinds facing the housing industry (high inventory levels, affordability and mortgage issues) will continue to make conditions difficult for all competitors in the industry. That said, we think the company is a strong operator that should continue to take market share, but its strong business model will not be able to overcome the weakness in housing. We would avoid the shares until it trades substantially lower or there is evidence of stabilization in the housing market.

Analyst Blog:

Cephalon, Inc. (Nasdaq: CEPH) is an international biopharmaceutical company focused on the discovery, development and marketing of products for the treatment of sleep disorder, neurological disorders, cancer and pain. These products are marketed in the U.S. and in several European countries. The settlement of all Provigil patent infringement cases has been a significant positive for Cephalon. However, Cephalon suffered a setback when the FDA issued a 'not-approvable' letter for Sparlon. Cephalon discontinued the development of Sparlon, which was expected to contribute significantly to both top- and bottom-line growth. 2007 should be a transitional year for the company, although we expect significant growth to return in 2008. We rate the stock a Hold with a target price of $70.

Business Objects (Nasdaq: BOBJ) reported solid fourth quarter results, with revenues and earnings, beating our estimates handily. The company experienced solid growth across its EPM and EIM solutions, although revenues related to its core BI products were down 4% year over year. Based on these results, we have raised our revenue expectations for the company for 2007 by $45 million, and now expect revenue growth of 14% in 2007. However, we are maintaining our earnings expectations at this time as margins continue to be pressured. We have lowered our target price to $39.00, or 37.5x our 2007 EPADS [earnings per American Depositary Share] estimate over the next six months.

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

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