Zacks Analyst Blog Highlights: Johnson & Johnson, CarMax, Inc., Rackable Systems, Inc., DURECT Corp. and Alpharma Inc

Business Wire, Oct 20, 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: Johnson & Johnson (NYSE: JNJ), CarMax, Inc. (NYSE: KMX), Rackable Systems, Inc. (Nasdaq: RACK), DURECT Corp. (Nasdaq: DRRX) and Alpharma Inc. (NYSE: ALO).

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Here are highlights from Friday's Analyst Blog:

J&J a Buy Up to $72

Johnson & Johnson (NYSE: JNJ) is one of the world's largest providers of healthcare products in the consumer, pharmaceutical and medical devices market. It has over 200 operating companies around the world and sells its products in more than 175 countries. J&J has an enormously diverse revenue stream consisting of market leading products in all three of its business segments.

Due to a number of products expected to experience declining sales, revenue growth in the next few years will likely slow relative to 2007. Incremental earnings growth will come in the form of improving margins and share buybacks.

CarMax a Sell in Near Term

CarMax (NYSE: KMX) continues to face a difficult used-vehicle environment, largely due to aggressive incentives from new vehicle manufacturers. Declining used-car value due to the ongoing weakness in the overall economy and higher funding cost at the CarMax Auto Finance is eroding the margins of the company.

The current economic slowdown and reduced consumer spending had a negative impact on the company's retail business. It is aggressively cutting prices on trucks and SUVs to reduce inventory.

Rackable Systems Feels Slowdown

Rackable Systems, Inc. (Nasdaq: RACK) continues to lead in green technologies for lower power consumption, and high density servers. The company trimmed its outlook for fiscal 2008 due to a slowdown in the corporate purchasing, which has greatly impacted its sales and bookings.

We have therefore adjusted our forecast to reflect the company's weak outlook. We believe, over the long-term it may be a challenge for the company to compete with larger hardware vendors. We do not expect the company to return to GAAP profitability in the near future, and neither do we believe that the company will return to previous margins given the increasingly intense competitive environment and the need for RACK to invest in engineering.

Durect Pharma Attractively Priced

Durect (Nasdaq: DRRX) utilizes six proprietary drug delivery technologies to develop pharmaceutical systems that enhance treatment capabilities in the areas of chronic pain, cardiovascular diseases, and central nervous system disorders.

We are optimistic about the developing pipeline, and are pleased to see that the company filed an NDA for its first candidate, Remoxy, on schedule. The FDA granted priority review which means a response should be out by December 10, 2008. We were also pleased to hear about Durect's partnership deal with Alpharma (NYSE: ALO) for Eladur.

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