Zacks Analyst Blog Highlights: National Semiconductor Corp., Watsco, Inc., Principal Financial Group, Genta Incorp. and United Therapeutics Corp

Business Wire, August 21, 2008

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: National Semiconductor Corp. (NYSE: NSM), Watsco, Inc. (NYSE: WSO), Principal Financial Group (NYSE: PFG), Genta Incorp. (Nasdaq: GNTA) and United Therapeutics Corp. (Nasdaq: UTHR).

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Here are highlights from Wednesday's Analyst Blog:

National Semi at a Nice Price

May quarter revenue for National Semiconductor Corp. (NYSE: NSM) was in-line with consensus expectations, although the EPS exceeded. Both order rates and backlog picked up in the last quarter and distributor inventory levels remain low.

Forward revenue guidance is flat-to-up 3% Q1. New higher-margin products continue to grow in the mix, and management has refocused R&D into areas that should sustain these margins and even expand from current levels. Valuation remains attractive in our opinion. Consequently, we are reiterating our Buy rating on NSM shares.

Watsco Blowing Hot & Cold

Watsco, Inc. (NYSE: WSO) reported second quarter 2008 EPS of $0.94, above our estimate of $0.88 and up 6.8% year-over-year, amid strong revenue growth and higher gross profit as well as contributions from various profit improvement activities implemented in early 2008.

WSO has the liquidity position and the de-levered balance sheet to continue with its aggressive acquisition strategy. With high energy prices likely to persist over the near future, we believe consumers will increase the purchase of higher-efficiency air conditioning systems. We also believe the strength of the replacement market can offset some of the rapid deterioration in the new home market in 2008. We recommend investors to Hold WSO shares in their portfolio.

Principal Finc'l Fights Headwinds

Principal Financial Group's (NYSE: PFG) operating earnings of $0.97 per diluted share were slightly below our expectations.

Losses in the spread and securitization business, reflecting volatile conditions in the global credit markets, deteriorated operating earnings in the US Asset accumulation segment and the Global asset management segment, but was partially offset by improvements in the operating results of International Asset Management and Accumulation segment and the Life and Health segment.

Genta Goes Into Survival Mode

We maintain a Hold rating on Genta Incorporated (Nasdaq: GNTA), a biopharmaceutical company focused on developing and commercializing drugs for the treatment of cancer.

Unfortunately, the company has entered into a survival mode due to the shortage of cash. With the non-approval of Genasense for chronic lymphocytic leukemia by FDA, the future of Genasense remains uncertain. In July 2007, the EMEA indicated that approval of Genasense in melanoma will require the conduct of another clinical study. Genta believes that the AGENDA trial will be able to address the EMEA's requirement adequately.

United Thera Expecting Too Much

Although the current business fundamentals at United Therapeutics Corp. (Nasdaq: UTHR) are solid, we are seeing several potential hiccups coming in the next year. With the stock up 65% over the past twelve months and currently trading at 50x our 2008 EPS estimate, we believe investors are pricing the stock for near-flawless execution.

Expectations are high, and any slip-up, even minor, may cause a sell-off in the shares. As a result, we are initiating with a Sell rating and an $82 price target.

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