Zacks Analyst Blog Highlights: Merck, Alexza Pharmaceuticals, Eastman Chemical, Stoneridge and Abbott Laboratories

Business Wire, June 16, 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: Merck (NYSE: MRK), Alexza Pharmaceuticals, Inc. (Nasdaq: ALXA), Eastman Chemical (NYSE: EMN), Stoneridge (NYSE: SRI) and Abbott Laboratories (NYSE: ABT).

See the latest posts to the Analyst Blog: http://www.zacks.com/blog/post_info.html?g=6

Here are highlights from Wednesday's Analyst Blog:

Merck Looking to Cut Costs

Merck & Co. Inc.'s (NYSE: MRK) results for the past several quarters were far above consensus expectations. Analysts have clearly under-estimated the power of what three new big drugs such as Vytorin (cholesterol), Januvia (diabetes), and Gardasil (cervical cancer vaccine) can do.

The slide in sales of osteoporosis drug Fosamax and cholesterol fighter Zocor in 2008 will be offset by the growth in the vaccine business and the continued strong ramp of mega-blockbuster asthma treatment Singulair and Januvia/Janumet.

The issues surrounding cardiovascular drugs Vytorin and Zetia will slow revenue growth. We, however, look towards the second quarter for a clearer picture. Merck's very recent pipeline troubles are also of concern. We believe the uncertainty surrounding sales of the cholesterol business will limit the upside to the stock.

Alexza Pharma Outlook Cautious

We are enthusiastic on Alexza Pharmaceuticals, Inc.'s (Nasdaq: ALXA) proprietary novel Staccato system that reformulates oral or injectable small molecule compounds into an inhalable aerosol. Preliminary data on AZ-001 (migraine) and AZ-004 (agitation in schizophrenia) looks encouraging, but the company still has to complete phase III trials before we proclaim either a success. Our rating is Hold.

Funding operations doesn't seem to be an issue for now. Alexza probably has enough cash to fund its development programs into the first quarter of 2010. But the only clinical stage candidate we expect to be on the market in 2011 is AZ-001. The company could be in position to file with AZ-004 in 2010 / 2011, so by 2012 both AZ-001 and AZ-004 could be on the market.

Right Mix for Eastman Chemical

Eastman Chemical (NYSE: EMN) has a strong fibers business and solid financials. The company had an impressive first quarter 2008, marked by increasing prices, volume gains, and strength in several end markets.

We are also enthused by the company's cost cutting and restructuring programs, in which Eastman plans to sell unprofitable units and close down businesses, particularly in its CASPI segment. The company is likely to benefit from its recent focus on the industrial gasification business.

Stoneridge Looking Solid to $21

Stoneridge (NYSE: SRI) is aggressively cutting costs and benefiting from the growth of the commercial vehicle market. Increased use of electronics in vehicles is also benefiting the company. We rate the shares a Buy with a target of $21.00.

Stoneridge, Inc. designs and manufactures engineered electrical and electronic components, modules, and systems for the automotive, medium and heavy-duty truck as well as agricultural vehicle markets. The company's primary products include power distribution components and systems, electrical switches and sensors, and other modular assemblies.

Risk/Reward Good for Abbott Labs

We feel despite a few challenges ahead for Abbott Laboratories (NYSE: ABT), there is significantly more to look forward to than there is to worry about. We expect double-digit EPS growth through the end of 2012, driven by strong sales of key drug Humira, for inflammatory diseases, and the company's rapidly growing vascular business. We remain excited about the company's late-stage line-up, of which a number of candidates should make it to market in 2008.

Humira is quickly becoming the anti-TNF drug of choice, gaining sizable market share and we believe the drug could eclipse $7 billion in sales by 2012. Also, Abbott is now a major player in the drug-eluting stent space with XIENCE V, which should eventually command significant market share. Abbott has made a slew of transactions over the past 18 months that should contribute meaningfully to growth in 2008 and beyond.

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

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