Zacks Analyst Blog Highlights: Acadia, Allergan, Audible and Amazon

Business Wire, March 7, 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: Acadia Pharmaceuticals Inc. (Nasdaq: ACAD), Allergan (NYSE: AGN), Audible, Inc. (Nasdaq: ADBL) and Amazon (Nasdaq: AMZN).

See the latest posts to the Analyst Blog here:

http://www.zacks.com/blog/post_info.html?g=6

Here are highlights from Thursday's Analyst Blog:

Acadia Outlook Quite Promising

Acadia Pharmaceuticals Inc. (Nasdaq: ACAD) is a biopharmaceutical company utilizing innovative technology to fuel drug discovery and clinical development of novel treatments for central nervous system disorders. The company currently has five drug programs in clinical and pre-clinical development directed at large unmet medical needs and major commercial markets. We are expecting a number of positive catalysts in 2008, including a partnership on Pimavanserin for phase III trials in schizophrenia.

We continue to be positive on the Acadia story. The company has performed well in 2007 with positive data from the Pimavanserin schizophrenia phase IIb trial, sending the shares up by over 100%. Data from this trial was highly encouraging, and we think Acadia is now in a strong position to seek a strategic partner perhaps later in 2008.

The shares sold favorably over the past few months as management has refused to give a timeline or even comment on when a partnership would be formed. We think this is a wise move, as we can cite several other biotech firms that are under heavy selling pressure because they have established a partnership timeline and failed to meet it.

Nevertheless, when a partnership does come, it could act as major catalyst to send the shares higher. We continue to recommend the name and are maintaining our $20 price target. We arrive at this figure by applying a 25x multiple (the current peer group average) to our 2012 EPS forecast of $2.31, and discounting to present day by 25%. We think this rate is fair, perhaps even high, given the four internal shots on goal before 2011, and collaborative programs with Allergan (NYSE: AGN) moving forward.

Questions Answered for Audible

Audible, Inc. (Nasdaq: ADBL) reported better-than-expected revenues and earnings for the fourth quarter of 2007 although its earnings were helped by the sale of net operating loss income tax credits in the state of New Jersey. The cost of acquisition of new AudibleListener members increased to $46 per member, from $45 in the prior quarter. Other operating expenses declined marginally in the quarter compared to the prior quarter.

The company broke even on an operating basis for the first time in the last eight quarters. The US GAAP net income for the fourth quarter was $3.9 or $0.16 per share, much better than our estimate of $0.02 primarily due to the sale of net operating loss income tax credits in the state of New Jersey.

Audible is showing signs of improving its operations, and has been trying to cut costs although the general cost structure remains high. The company recorded a negative operating margin for nine consecutive quarters apart from the most recent quarter.

We are encouraged by the company's initiatives to acquire more premium customers at discounted rates and we believe that these customers will generate higher revenues going forward. The stickiness of these customers was shown by the churn rate which rose slightly in the fourth quarter of 2007.

The impending merger with Amazon (Nasdaq: AMZN) puts all speculation regarding the future of the company at rest and effectively puts a cap on the share price at $11.50. We continue to rate shares of ADBL a Hold and expect to see a smooth passage for the merger by the middle of 2008.

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