Zacks Bull and Bear of the Day Highlights: tw telecom, AutoNation, TDS, Iron Mountain and Onyx Pharmaceuticals

Business Wire, Nov 10, 2008

CHICAGO -- Zacks Equity Research highlights tw telecom, Inc. (Nasdaq: TWTC) as the Bull of the Day and AutoNation, Inc. (Nasdaq: AN) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Telephone & Data Systems (NYSE: TDS), Iron Mountain, Inc. (NYSE: IRM) and Onyx Pharmaceuticals, Inc. (Nasdaq: ONXX).

Full analysis of all these stocks is available at http://at.zacks.com/?id=2676.

Here is a synopsis of all five stocks:

Bull of the Day: tw telecom, Inc. (Nasdaq: TWTC)

tw telecom, a leading provider of managed voice & data networking solutions, declared third quarter 2008 financial results with net earnings significantly above our estimates. TWTC continues to generate sustaining revenue from large business enterprises primarily through sales of Ethernet and IP-VPN services. This has reduced the company's dependence on telecom carrier customers.

Although the balance sheet remains considerably leveraged, we do not expect any immediate liquidity crisis since no significant debt will mature before 2013. Growth prospects for TWTC remain firm as a result of growing demand for bandwidth to implement converged IP-based networks.

We believe that the recent weakness in the stock price may be due to overall equity market conditions and this may create favorable investment opportunities to purchase shares of the company. We maintain our Buy rating with a reduced valuation target taking into consideration the current economic slowdown.

Bear of the Day: AutoNation, Inc. (Nasdaq: AN)

We expect AutoNation to be hurt by a continuing weak new car market. The company is disproportionately exposed to Florida and California, states that will be hit the most by a slowing car market.

Moreover, the credit crisis in the U.S. led to a 22% decline in AutoNation's sales followed by a 32% decline in net profits in the third quarter of 2008. AutoNation's higher debts and interest charges are also a major cause of concern.

Tight credit and slumping U.S. demand are expected to continue to affect sales and thereby margins in the near term. As a result, we rate the shares a SELL with a target of $4.50.

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Telephone & Data Systems (NYSE: TDS)

We maintain our Hold recommendation for Telephone & Data Systems Inc., following the release of recent quarterly results. Although the management has reduced its 2008 outlook for revenue and subscriber additions, it continues with share repurchase initiatives.

TDS is focusing on improving profitability through network technology upgrades, strengthening its brand image and expansion of network coverage through acquisitions. Although recent quarterly results were above of our expectations, we are not yet convinced that the company can sustain the earnings momentum in future reporting periods, principally due to higher expenses for wireless infrastructure upgrades and promotional campaigns.

Iron Mountain, Inc. (NYSE: IRM)

Iron Mountain Inc., based in Boston, Massachusetts, is a leading provider of information protection and storage services in North America, Latin America, Europe and the Pacific Rim. We remain encouraged by the strength of the company's information protection and storage services business, which reported its 79th consecutive quarter of increased revenues in the third quarter.

However, Iron Mountain lowered its guidance for fiscal 2008 due to significant strengthening of the U.S. dollar against the major currencies. The company's preliminary guidance for fiscal 2009 is also disappointing. While positive on the stock, we have concerns regarding the high valuation and dependence on large acquisitions for growth. We therefore maintain our Hold recommendation on the shares.

Onyx Pharmaceuticals, Inc. (Nasdaq: ONXX)

Onyx Pharmaceuticals, headquartered in Emeryville, California, is engaged in the development of novel cancer therapies that target the molecular basis of cancer. The company delivered better-than-expected financial performance in the third quarter and we believe it will continue to deliver very good financials for the rest of 2008 and beyond.

Nexavar sales in the quarter remained strong. This is mainly attributed to market penetration in the liver cancer market while Nexavar market share in the kidney cancer market has stabilized due to heavy competition. We believe Nexavar sales will continue to grow over the next several years since the label has expanded to liver cancer.

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About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

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