Zacks Analyst Blog Highlights: Osiris Therapeutics, Genzyme, Energy Conversion Devices, Celanese and Iconix Brand Group

Business Wire, June 12, 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: Osiris Therapeutics, Inc. (Nasdaq: OSIR), Genzyme Corp. (Nasdaq: GENZ), Energy Conversion Devices, Inc. (Nasdaq: ENER), Celanese Corp-A (NYSE: CE) and Iconix Brand Group, Inc. (Nasdaq: ICON).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=4579

Here are highlights from Wednesday's Analyst Blog:

Buy Small-Cap Biotech Osiris

We are moving Osiris Therapeutics, Inc. (Nasdaq: OSIR) over to our Small-Cap Research coverage program. The company is making significant progress with stem cell therapies. Its lead product candidate, Prochymal, has the potential to be a sort of wonder drug for various inflammatory or tissue damage indications. As such, we are initiating coverage with a Buy rating and $20 price target.

Osiris is currently in three phase III trials, all under U.S. Food and Drug Administration's (FDA) Fast Track. These programs include steroid refractory Graft versus host disease (GvHD), acute GvHD, and Crohn's Disease (CD). Management is also studying the drug in earlier-stage programs for Myocardial Infarction, Chronic Obstructive Pulmonary Disease, Type-1 diabetes, and Acute Radiation Syndrome (ARS). With a full label, Prochymal has blockbuster potential.

The $224.7 million contract win with Genzyme Corp. (Nasdaq: GENZ) from the U.S. Department of Defense was fantastic news. Although the headline number of $224.7 inflates the actual economic value to Osiris, if Prochymal can eventually receive FDA approval for ARS, this could be a very profitable venture for management. We remind investors that the government has committed to purchasing 20,000 doses of Prochymal at $10,000 per dose, if all goes well in the clinical studies.

Energy Conversion Now Profitable

We remain optimistic about Energy Conversion Devices, Inc.'s (Nasdaq: ENER) long-term potential success in the high-growth alternative energy industry. The company also achieved profitability for the first time in the reported quarter since it went public in 1969. Nevertheless, we note the stock's high volatility, pending sale of its Cobasys joint venture, and higher preproduction costs.

A history of negative profit margins, operating income and negative historical earnings, including EPS losses until Q2 08, without meaningful valuation metrics, collectively show potential for moderate-to-high returns yet with high risk. Accordingly, we maintain a speculative Buy recommendation on ENER common stock.

The investment outlook for the alternative energy industry is bullish, in our view, with significant growth potential over the next 5-10 years. The consolidated revenue is expected to be between $73 and $78 million for the fourth quarter ending June 30 and between $246 and $251 million for fiscal 2008. For the fourth quarter, ENER expects to maintain the 30% to 31% gross margin it achieved in the reported third quarter.

Celanese a Market Leader

Celanese Corp-A (NYSE: CE), the world's largest producer of acetyl products, has a strong growth strategy with development in Asia as a key factor. There is $400 million of free cash flow per year, primarily focused on share repurchase.

Higher pricing on continued strong global demand for Acetyl Intermediates products, positive currency impacts, growth in Asia supported by the company's new acetic acid unit in Nanjing, China, as well as sales of Industrial Specialties from the acquired Acetate Products Limited are driving the company's sales.

In addition, the company has leadership positions in oligopolistic markets [those dominated by a small number of sellers] that have solid fundamentals. Celanese is in the midst of a major profit improvement program. As a result, we rate the shares a Buy with a target of $50.00. This is 12.7x our 2008 estimate.

Buying Opportunity for Iconix

Iconix Brand Group, Inc. (Nasdaq: ICON) shares are down over 34 percent year-to-date because of concerns about the soft economy and the company reducing its sales and earnings guidance for the last three quarters of 2008. At its current valuation, ICON's stock price more than discounts the soft economy and reduced guidance and ignores the company's long-term growth potential.

We view the sell-off as a buying opportunity. Iconix Brand Group should deliver solid long-term earnings growth thanks to its highly profitable business model, diversified portfolio of brands, and opportunities for expansion both domestically and internationally.

Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=2649.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

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.