Zacks Analyst Blog Highlights: Schering-Plough, Merck, CNOOC and Sinopec

Business Wire, March 23, 2007

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: Schering-Plough (NYSE: SGP), Merck (NYSE: MRK), CNOOC (NYSE: CEO) and Sinopec (NYSE: SNP).

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

Here are highlights from Thursday's Analyst Blog:

Turnaround is Complete at SGP

Schering-Plough (NYSE: SGP) is engaged in the development, manufacturing and marketing of pharmaceutical products around the world. The company focuses on prescription drugs, animal health, foot-care and sun-care products. Lead products include its antihistamine franchise Claritin/Clarinex and a cholesterol-lowering joint-venture therapy treatment (Vytorin) with Merck (NYSE: MRK).

The turnaround is complete at SGP. The company should deliver the highest four-year earnings growth rate in the large-cap pharmaceutical industry. Valuation becomes attractive based on recovery EPS [earnings per share] in 2008 and 2009. The company recently announced it will acquire Organon Bio for $14.4 billion in cash/debt/equity. We recommend investors buy the name up to $28.

Expect PTR to Trade With Market

Zacks senior Chinese market analyst Paul Cheung, CFA retains his Hold recommendation on shares of PetroChina (NYSE: PTR), even though the shares have pulled back from their highs around the beginning of the year. We looked into his recent research report to find some details:

While PetroChina's results continue to benefit from high oil prices and strong domestic demand, the company's long-term growth prospects remain uncertain. Given the maturity of its domestic upstream asset base, international acquisitions appear to be the only growth avenue open to the company.

PetroChina faces a number of challenges in executing this strategy, including high asset prices due to continued strength in commodity prices and intense global competition for upstream assets. Thus, we maintain our Hold rating for PTR ADRs [American Depositary Shares].

Based on our estimate for fiscal year 2007 earnings per ADR, the company is trading at 9.9x, which is slightly lower than the industry mean. Compared with its local peers, its P/E [price-to-earnings] is similar to that of CNOOC (NYSE: CEO) and Sinopec (NYSE: SNP). Thus, we believe current valuation fairly represents its fair value. Using a P/E multiple of 10.4x our fiscal year 2007 earnings per ADR estimate of $11.11 yields a target price of $116.00, which we believe reflects the company's prospects.

See the latest posts to the Analyst Blog by visiting http://at.zacks.com/?id=2645

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