Zacks Bull and Bear of the Day Highlights: Plains Exploration & Production, Amylin Pharmaceuticals, Regions Financial, Equifax and OmniVision Technologies

Business Wire,  June 11, 2008  

Tags: Bull, Equifax, financial, New York Stock Exchange

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CHICAGO -- Zacks Equity Research highlights Plains Exploration & Production (NYSE: PXP) as the Bull of the Day and Amylin Pharmaceuticals (Nasdaq: AMLN) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Regions Financial (NYSE: RF), Equifax, Inc. (NYSE: EFX) and OmniVision Technologies, Inc. (Nasdaq: OVTI).

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: Plains Exploration & Production (NYSE: PXP)

We are initiating coverage of Plains Exploration and Production with a Buy recommendation and a six-month price objective of $84.00. After two major acquisitions in 2007, the company expanded its California- and Gulf of Mexico-centered operations to the Rockies and several Texas locations. These accretive acquisitions, which roughly double its proved reserves in 2007, have given the company an impressive value proposition, growth and stable cash flows.

Near-term growth should come from two gas plays in the Piceance Basin in the Rockies and in the Flatrock area off the coast of Louisiana. At a time when commodity prices are at extremely favorable levels, the near-term production growth should give PXP expanded margins as well as increased cash flow.

Bear of the Day: Amylin Pharmaceuticals (Nasdaq: AMLN)

Sales of Byetta have disappointed over the past several quarters. Specially, the first quarter 2008 was very weak, albeit in part due to wholesaler destocking. However, the Amylin story is tied to the success or failure of phase III potential blockbuster, exenatide LAR. Data on LAR from the DURATION-1 was presented yesterday at ADA. We classified the data as "good," but not "great." Additional data from the DURATION program is expected in 2009.

At this time, the valuation on Amylin is not attractive. The stock is trading at 21x our 2012 EPS estimate well above the peer-group at 10x and that estimate assumes LAR posts sales over $1.5 billion. In the meantime, there are few catalysts and operating expenses are soaring. We would avoid the name.

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Regions Financial (NYSE: RF)

We maintain our Hold recommendation on the shares of Regions Financial Corporation, an Alabama-based financial holding company. Though the company has started the implementation of its three-year strategic plan, focused on new revenue generation, we have reservations for credit quality issues that continue to overhanging the economy and this company in particular.

RF's exposure to a residential construction portfolio of $6.2 billion and the negative trend of its 90 days past due loan level are of major concern to us at this time. The company's net interest income has been declining for the past two quarters.

Equifax, Inc. (NYSE: EFX)

Equifax, Inc. is finding new avenues for growth in the International, Personal, and Commercial Solution businesses. The company's growing reliance on subscription revenue provides a steady revenue stream, and the TALX Corporation acquisition is accretive to earnings.

However, continued weakness in mortgage activity resulted in a decline in mortgage related revenues, thereby softening its U.S. Consumer Information Solution business. Given its sensitivity to the credit market, we maintain a Hold recommendation on the shares.

OmniVision Technologies, Inc. (Nasdaq: OVTI)

OmniVision Technologies is a fabless original equipment manufacturer (OEM) of complementary metal oxide semiconductor (CMOS) image sensors and support circuitry used within handsets and applications in other mass markets. The company's fourth quarter revenue fell short of consensus estimates, although the EPS exceeded.

Forward guidance is for a revenue increase of 0.6% to 12.5% in the first quarter, as management expects a rebound in Video Graphics Array (VGA) sales. Both emerging products and handsets are expected to witness continued growth through 2008. Although its shares have traded down over the last two months, we are reiterating our Hold rating in view of uncertainties in consumer spending and possible market share losses in China.

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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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Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.

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Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.