Zacks Bull and Bear of the Day Highlights: Crown Castle, King Pharmaceuticals, McGraw-Hill and XTO Energy

Business Wire, Jan 23, 2008

CHICAGO -- Zacks Equity Research highlights Crown Castle, Inc. (NYSE: CCI) as the Bull of the Day and King Pharmaceuticals (NYSE: KG) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on McGraw-Hill (NYSE: MHP) and XTO Energy (NYSE: XTO). Full analysis of all these 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 Crown Castle, Inc. (NYSE: CCI), a leading operator of wireless communications towers in the USA and Australia. The company will shortly announce its fourth quarter 2007 financial results. Overall performance has been driven by substantial demand for more tower space to facilitate high-speed data services, in particular 3G and WiMax technologies. The acquisition of Global Signal has positioned the company as the largest tower operator in the USA providing better than expected cost synergies for the merged entity. Although a substantial level of debt remains concerning, management has provided a financial outlook that its recurring cash flow per share is likely to increase by 25% during fiscal 2008. Our long-term view regarding the wireless tower industry continues to be positive and we believe Crown Castle is well positioned to capitalize on emerging telecom network deployment opportunities.

Bear of the Day:

Our Bear of the Day recommendation is for King Pharmaceuticals (NYSE: KG), a vertically integrated pharmaceutical company that focuses on developing and marketing branded prescription pharmaceutical products. Most of the company's key products are either facing increased competition or generic threat. Additionally, we are concerned about declining prescription trends for most of these products. While King has several candidates in its pipeline, we do not think that these products will be sufficient to compensate for the loss of revenue that will take place with the genericization of key products over the next few years. We believe that generic threat and mounting competition will continue to hinder both top- and bottom-line growth going forward. As such, we maintain our Sell rating on the stock with a target price of $8.

Analyst Blog:

McGraw-Hill (NYSE: MHP) boasts a decade-long track record of mid-teens EPS growth. Over the last five years, MHP has recorded a CAGR [compound annual growth rate] of 39% in free cash flow generation while increasing ROIC by 990 basis points to 25.6%. In turn, the stock has outperformed the S&P 500 index by a wide margin for more than a decade. However, the stock currently trades in line with its historical average forward P/E while the company faces a severe slowdown in the housing and mortgage-backed securities market, and the potential for a slowdown in the ratings business if interest rates were to rise significantly. We would wait for a more attractive entry point.

XTO Energy (NYSE: XTO) remains well positioned to maintain its impressive production-growth momentum in 2008, with an anticipated 17% increase in production volumes for the year. However, we are continuing our Hold rating on XTO ahead of the company's fourth quarter 2007 results as we believe that the strong production-growth rate and competitive cost structure are already reflected in the stock's premium valuation relative to the peer group. On November 14, 2007 XTO announced a 5-for-4 stock split to be distributed in the form of a stock dividend. The company also declared that it would maintain its quarterly cash dividend of $0.12 per share ($0.48 per share annual dividend), affecting a 25% dividend increase. This was paid on December 13 to shareholders of record as of November 28, 2007. XTO's shares began trading on a post-split basis on December 14.

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

About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

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