Zacks Analyst Blog Highlights: Xoma Ltd., Goldman Sachs, Priceline.com, ON Semiconductor and LSI Logic

Business Wire, May 14, 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: Xoma Ltd. (Nasdaq: XOMA), Goldman Sachs (NYSE: GS), Priceline.com (Nasdaq: PCLN), ON Semiconductor (Nasdaq: ONNN) and LSI Logic (NYSE: LSI).

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Here are highlights from Tuesday's Analyst Blog:

XOMA Making the Right Moves

Advancement of XOMA-052 in the current phase I trials remains the chief focus of the management of Xoma Ltd. (Nasdaq: XOMA). Data on these two trials are expected in the third quarter 2008. We expect an initiation of a phase I trial on XOMA-629 also in the third quarter 2008.

Management will look to bring in one additional collaboration partner on board at some point this year. All the above milestones should get the stock moving higher in the second half of the year.

We believe Xoma's antibody discovery platform is starting to show signs of paying off, as both -052 and -629 could prove to be significant products in the not-so-distant future. The name remains significantly under-valued in our view.

Royalty revenue continues to provide meaningful growth to Xoma. Sales of Raptiva totaled $61 million in the first quarter 2008. Sales of Lucentis totaled $393 million in the first quarter. Both products are growing at double-digits rates. In May 2008 Xoma used this growing royalty line to secure a $55 million loan with Goldman Sachs (NYSE: GS). But with the shares trading at $2.15, Xoma is a very volatile stock.

Don't Chase Priceline Shares Here

Priceline.com's (Nasdaq: PCLN) first quarter results easily blew past consensus estimates, and management's guidance for 2008 was equally bullish. The strength in Priceline.com's international business and operating expense controls continue to drive the company's impressive results.

What's more, we think the company is well-positioned to weather a slowdown in consumer spending due to the value proposition it offers customers. Still, we wouldn't chase the shares here, as they trade at over 25x our 2008 EPS estimate. That is a pricey multiple in the current market.

We have been bullish on PCLN shares since we upgraded the stock in January of 2006, when it was trading around $22 per share. However, we think the stock, which is now trading around $140, is fairly valued. We think it is appropriate to go with a neutral stance.

ON Semi On the Right Path

ON Semiconductor Corporation (Nasdaq: ONNN) is an original equipment manufacturer (OEM) of primarily analog semiconductors used within a diverse set of end markets. March quarter results beat consensus estimates on the top and bottom-line.

Next quarter's revenue guidance is for 3%-6% growth. Management anticipates that total revenues will be approximately $545 to $560 million in the second quarter of 2008. Further, they expect that average selling prices for the second quarter of 2008 will be down approximately two per cent sequentially. Backlog represents over 85% of next quarter's revenue projection.

The company has also begun to get significant revenue from its recent major purchase of LSI Logic's (NYSE: LSI) Gresham, Oregon wafer facility, which has the potential to be a solid revenue driver. The products produced at the Gresham facility are of the high-margin variety. We feel the stock is under valued at these levels, and recommend investors Buy the shares.

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