Zacks Bull and Bear of the Day Highlights: Telus Corp., Overstock.com, Barr Pharmaceuticals, Actions Semiconductor and Sonic Innovations

Business Wire, Oct 14, 2008

CHICAGO -- Zacks Equity Research highlights Telus Corporation (NYSE: TU) as the Bull of the Day and Overstock.com, Inc. (Nasdaq: OSTK) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Barr Pharmaceuticals, Inc. (NYSE: BRL), Actions Semiconductor (Nasdaq: ACTS) and Sonic Innovations (Nasdaq: SNCI).

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: Telus Corporation (NYSE: TU)

We are upgrading our rating to Buy for Telus Corp., the second largest telecommunications provider in Canada. Operating results demonstrate strong wireless and high-speed Internet subscriber growth, effectively offsetting declines in its legacy fixed-line business. Notably, recent net wireless subscriber additions outpaced retention efforts made by the company's closest peers, leading to a second-quarter record.

We are encouraged by Telus wireless business prospects given its strong brand value, expanding product/service portfolio and ongoing technology upgrade initiatives, as we account for the potential of a more competitive landscape in the Canadian wireless market. Moreover, we are impressed by management's favorable outlook for 2008 and commitment to return enhanced value to shareholders through continued share buyback programs and attractive dividend payouts.

Further, we expect 3G wireless high-speed data services and increased penetration of smartphone devices to sustain and improve Average Revenue Per User (ARPU) moving forward. Although recent news surrounding the potential new competitors in the Canadian wireless market (due to AWS spectrum auctions) may have weighed in on cautious investment sentiment, Telus continued commitment in maximizing shareholder return through attractive dividend payouts, and share repurchases provide reasonable support that may limit downside risk.

Bear of the Day: Overstock.com, Inc. (Nasdaq: OSTK)

Overstock is an online closeout retailer, offering discount, brand-name merchandise for sale primarily over the Internet. Its merchandise offerings include: CDs, DVDs, magazines, and books, music, videos and games (BMV); as well as bed and bath goods, kitchenware, watches, jewelry, electronics, sporting goods, and designer accessories.

We remain negative on OSTK shares. The company's business model is flawed. Its gross margin is not large enough to support its operating cost structure. What's more, competitive pressures are increasing in the e-commerce space, and Overstock.com doesn't stack up to larger and better-run companies in online retail.

And with the economy weakening further, consumers are becoming increasingly reluctant to spend money on discretionary purchases. As a result, we are reducing estimates for 2008 and 2009.

We believe it is likely that the company will report disappointing results for the third quarter and warn that the fourth quarter will also fall short of market expectations. We reiterate our Sell rating and $7.50 target price.

Latest Posts on the Zacks Analyst Blog:

Barr Pharmaceuticals, Inc. (NYSE: BRL)

Barr Pharmaceuticals is a global specialty pharmaceutical company engaged in the development, manufacture and marketing of branded and generic drugs. On July 18, 2008, Barr announced that it has entered into an agreement with Teva whereby the latter will acquire Barr for $7.46 billion plus the assumption of net debt of approximately $1.5 billion.

We had issued a Sell rating on Barr after the company posted disappointing first-quarter results and slashed its full-year outlook. However, we moved back to a Hold rating following the Teva takeover announcement. This offer has come at the right time for Barr -- the deal should close later this year. We maintain a Hold rating with a $65 price target.

Actions Semiconductor (Nasdaq: ACTS)

Actions Semiconductor designs and markets integrated platform solutions, including system-on-a-chips (SoCs). The firm derives virtually all its revenue from the ultra-competitive MP3 market, which has experienced serious ASP [average selling price] erosion.

Help may be on the way with the high end series 13, which has 30 design wins. We would remain on the sidelines until such time as the design wins are transformed into meaningful revenue growth.

Sonic Innovations (Nasdaq: SNCI)

Sonic Innovations designs, develops, manufactures and markets advanced digital hearing aids, designed to provide the highest levels of satisfaction for hearing-impaired consumers. Capitalizing on its advanced understanding of human hearing, the company has developed patented digital signal processing (DSP) technologies, and embedded them into the smallest single-chip DSP platform ever installed in a hearing aid.

SNCI has been consolidating operations in Europe to reduce operating costs and to focus resources on markets that offer the greatest profitability. Our price target is based on a price-to-sales multiple of roughly 0.6x FY09 sales estimate. The target is $3.00 per share.

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=2649.