Zacks Analyst Blog Highlights: Genomic Health, Teva Pharmaceuticals, Omnicom, MCG Capital and Merrill Lynch

Business Wire,  April 24, 2008  

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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: Genomic Health Inc. (Nasdaq: GHDX), Teva Pharmaceuticals (Nasdaq: TEVA), Omnicom Group (NYSE: OMC), MCG Capital Corporation (Nasdaq: MCGC) and Merrill Lynch & Company (NYSE: MER).

See the latest posts to the Analyst Blog: http://www.zacks.com/blog/post_info.html?g=6

Here are highlights from Wednesday's Analyst Blog:

Lots Riding on One GHDX Drug

Genomic Health Inc. (Nasdaq: GHDX) is an oncology-based biotech company focused on the development and commercialization of genomic-based clinical diagnostic tests for cancer that allow physicians and patients to make individualized treatment decisions. The company's lead product is Oncotype DX, which is used for early stage breast cancer patients to predict the likelihood of cancer recurrence.

Sales of Oncotype remain robust and are expected to increase by over 40 per cent in 2008. We are optimistic about the growth of Oncotype. Clinical studies have validated the use of Oncotype for breast cancer patients. In recent months, Oncotype met the criteria set by Blue Cross and Blue Shield Association Technology Evaluation Center for women with breast cancer and its use in breast cancer treatment selection was recommended by the ASCO.

However, we continue to be concerned about the company's weak pipeline. The company relies heavily on Oncotype DX for both short-term and long-term growth. Sales of the test continue to rise sharply and the company expects to cross the $100-million mark in sales in 2008, a year ahead of our expectations.

We would like to gain more visibility on how Genomic Health diversifies its product offerings and how it expands internationally before we become bullish on the shares. Currently, the company sells Oncotype DX in Israel under a testing and services agreement with Teva Pharmaceutical Industries Limited (Nasdaq: TEVA) and in Japan under an agreement with SLR, Inc. Recently, the company signed an agreement with Medical Solutions PLC for distributing the product in the U.K.

Omnicom Trades Near Fair Value

Omnicom Group (NYSE: OMC) continues to generate solid organic revenue growth and new business wins. In addition, management continues to acquire complementary companies that either serve or have the ability to serve the existing client base through the extension of the company's platform of services.

On April 22, 2008, Omnicom Group reported financial results for the first quarter 2008 ending March 31, 2008. The company posted quarterly earnings of $0.65 per diluted share, up 18.2% from $0.55 recorded in the year earlier period and $0.03 above expectations.

Worldwide revenue increased 12.5% from the prior year to $3.20 billion, up from $2.84 billion and benefited from solid 6.4% organic revenue growth, 1% growth from acquisitions, and a positive currency impact of 5.1%. Domestic revenue increased 7.6% to $1.66 billion while international revenue increased 18.3% to $1.53 billion.

Challenges Restrain MCG Capital

MCG Capital Corporation's (Nasdaq: MCGC) fourth quarter 2007 distributable net operating income per share (DNOI) was ahead of estimates but GAAP EPS fell substantially short of the expectation. We anticipate the ongoing disruptions in the capital markets to continue to impact the results in the coming quarters.

Further, with heavy exposure to small and midsized companies, MCGC remains quite susceptible to the economic downturn. MCGC's large dividend has been strong point for the stock so far; however a dividend cut in the coming quarters is possible, given the current capital constraints.

We are maintaining our Hold recommendation on the shares, but are reducing our six-month target price to $8 per share. We noted that the company was not able to renew its $200 million credit-line with Merrill Lynch & Company (NYSE: MER) and has to repay the outstanding balances by August 31, 2008.

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

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