Zacks Bull and Bear of the Day Highlights: IBM Corporation, United Therapeutics, Greatbatch, Genuine Parts and School Specialty

Business Wire, August 27, 2008

CHICAGO -- Zacks Equity Research highlights IBM Corporation (NYSE: IBM) as the Bull of the Day and United Therapeutics (Nasdaq: UTHR) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Greatbatch, Inc. (NYSE: GB), Genuine Parts Co. (NYSE: GPC) and School Specialty (Nasdaq: SCHS).

Full analysis of all these stocks is available at http://at.zacks.com/?id=2676.

Here is a synopsis of all five stocks:

Bull of the Day: IBM Corporation (NYSE: IBM)

With over half of its revenue (58%) coming from outside the United States, IBM Corporation has been insulated from recent weakness in the U.S. economy than many of its peers. Although this trend may be ending as the U.S. economy picks up strength relative to Europe, IBM should continue to benefit from its focus on faster-growing markets through a series of acquisitions and divestiture of mature businesses.

Moreover, its position in emerging markets should continue to help drive growth. We maintain our Buy rating on IBM shares and a target price of $140.00.

Bear of the Day: United Therapeutics (Nasdaq: UTHR)

United Therapeutics Corporation, a biotechnology company, engages in the development and commercialization of therapeutic products for patients with chronic and life-threatening diseases. It offers products primarily in three therapeutic areas, including cardiovascular, cancer, and infectious diseases.

Although we believe current business fundamentals are solid, we are seeing several potential hiccups coming in the next year. And, 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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Greatbatch, Inc. (NYSE: GB)

Greatbatch is a leading producer and supplier of batteries, capacitors, and components used in implantable medical devices through its Implantable Medical Components (IMC) business.

The company reported second quarter top-line above expectations primarily due to acquisitions and strong end-market growth. However, EPS exceeded our expectations by a penny on lower R&D spending. The management provides adjusted 2008 EPS guidance of $1.20-$1.50. Our 2008 EPS estimates increase on positive news surrounding new products and promising innovations, and diversification beyond the CRM original equipment manufacturers, now less than 50% of Q208 sales.

Genuine Parts Co. (NYSE: GPC)

Genuine Parts has undertaken various initiatives such as product line expansion, penetration into new markets and acquisitions to boost sales and earnings. Genuine Parts has been diversifying its revenue base to reduce excessive dependence on the automotive replacement market.

The company's electronic and industrial parts businesses are showing impressive performance and it has a strong balance sheet. However, our optimism is dampened by the sluggish automotive and office products industries in the U.S. Considering these factors, we maintain our Hold recommendation with a target price of $43.

School Specialty (Nasdaq: SCHS)

In the first quarter, School Specialty, Inc.'s earnings per share were $0.16 below the consensus estimate and $0.15 below our estimate. In addition, the management updated its guidance for fiscal 2009. The company continues to expect revenue of $1.08-$1.11 billion, but it lowered its EPS guidance from $2.27-$2.43 to $2.23-$2.39 to account for a $0.04/share cost to closing a distribution center in the second quarter.

We are slightly reducing our 2009 EPS from $2.30 to $2.28 but leaving our fiscal 2010 EPS estimate at $2.45. School Specialty's industry-leading market position and cost-cutting efforts are offset by growing competitive pressures and limited organic growth prospects. We maintain our Hold rating on the stock.

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