Zacks Analyst Blog Highlights: R.H. Donnelley, Embarq, AT&T, Metabolix and Archer Daniel Midland

Business Wire, May 13, 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: R.H. Donnelley Corporation (NYSE: RHD), Embarq (NYSE: EQ), AT&T (NYSE: T), Metabolix, Inc. (Nasdaq: MBLX) and Archer Daniel Midland Company (NYSE: ADM).

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Here are highlights from Monday's Analyst Blog:

Trends Keep R.H. Donnelley a Hold

We rate the shares of R.H. Donnelley Corporation (NYSE: RHD) a Hold following the release of first quarter 2008 financial results. The company continues to generate substantial cash flow, although we note that debt currently comprises more than 90% of total enterprise value. The company expects ad sales declines in the mid single-digits in 2008, and we project relatively flat EBITDA generation this year.

Given ongoing concerns about an economic slowdown, we remain cautious on shares of RHD. The shares currently trade at approximately 15.2x our 2008 EPS estimate.

In light of the number and magnitude of acquisitions in the company's recent past, we believe that valuation based on an EBITDA multiple is more appropriate in this situation. The shares presently trade at approximately 7.8x our projection for full-year 2008 EBITDA.

We note that this multiple represents a discount to the weighted average EBITDA multiple paid by RHD for its three major acquisitions of the last four years. The company paid multiples of 9x, 8.3x and 10.4x for its acquisitions of the Embarq (NYSE: EQ) directory business in 2003, the AT&T (NYSE: T) directory business in 2004, and the Dex Media business in 2006, respectively. In light of the current economic environment, we believe that a discounted multiple, relative to previous acquisitions, is appropriate at this time.

Metabolix Needs Time to Grow

Metabolix Inc. (Nasdaq: MBLX) is a biotechnology company focused on the development and commercialization of environmentally sustainable, economically attractive alternatives to petrochemical-based plastics, fuels and chemicals. While we are excited about the prospects of Mirel (Metabolix's first product), we were disappointed to hear about the delay in the company's commercialization plans, as construction work at the Clinton facility was impacted by a harsh Midwest winter.

On the first quarter call, the company announced a delay in the scheduled commercialization date for Mirel from December 2008 to the second quarter of 2009. Meanwhile, FDA approval for the use of Mirel in food contact applications has yet to come. We believe investor focus will remain on these issues, and recommend waiting on the sidelines until we gain more visibility.

We maintain our Hold rating on Metabolix. Metabolix is working on the development and commercialization of environmentally sustainable and economically attractive alternatives to petrochemical-based plastics, fuels and chemicals. The company has a key strategic alliance with Archer Daniel Midland Company (NYSE: ADM), one of the world's largest agricultural products processors and industrial fermentors, for the development and commercialization of the company's lead technology platform, Natural Plastic.

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