Zacks Analyst Blog Highlights: Peabody Energy Corp., Pfizer Inc., SanDisk Corp., Everest Re Group, Ltd. and Biogen Idec Inc

Business Wire, Oct 23, 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: Peabody Energy Corp. (NYSE: BTU), Pfizer Inc. (NYSE: PFE), SanDisk Corp. (Nasdaq: SNDK), Everest Re Group, Ltd. (NYSE: RE) and Biogen Idec Inc. (Nasdaq: BIIB).

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Here are highlights from Wednesday's Analyst Blog:

BTU Forecast Highly Energized

Peabody Energy (NYSE: BTU) reported Q3'08 earnings from continuing operations of $1.38 per share, well above street consensus of $0.87 per share, on higher-than-expected production and per-ton prices, particularly from its Australian operations.

Although energy markets have pulled back significantly from their mid-July highs, we believe that supply and demand fundamentals for the coal industry have not changed. Peabody will generate a significant amount of free cash flow due to favorable margin expansion in all operating regions particularly Australia.

Pfizer in Strong Financial Position

Pfizer (NYSE: PFE) continues to face an uphill battle in growing its top-line given the company's sheer size and lack of a significant pipeline. While near-term earnings growth will come in the form of cost-cutting and share repurchases, the company lacks a catalyst to increase revenues once Lipitor loses patent exclusivity. We expect the company to look to do a number of significant deals in the pharma and biotech industry in order to build the franchise and invest for the future.

We recently upgraded our recommendation to Buy based on attractive valuation and strong financial position. Although the shares are up over 17% since we raised our recommendation on October 13th, we continue to think Pfizer shares are undervalued at these levels.

SanDisk Disappoints, Stays a Sell

SanDisk (Nasdaq: SNDK) is the largest supplier of flash storage card products based on NAND technology used in digital cameras, multimedia cellular phones, USB flash drives, and a growing variety of other digital consumer devices. SanDisk reported disappointing Q3 earnings results due to negative product gross margin and excess inventory.

We expect the company's earnings losses will be followed through the first half of 2009 even with substantial cost-cutting and restructuring efforts. We believe pricing is likely to remain weak until demand improves, which is not likely until the consumer spending picture strengthens.

Everest Re Estimates Taken Down

Everest Re (NYSE: RE) reported 3Q08 results of $0.21 per share, versus $3.68 per share in the year ago quarter. The loss emanated from the previously announced hurricane losses, write-downs associated with the company's financial sector bond holdings and equity securities, and net realized capital losses on the sales of securities. We maintain our Hold recommendation on the shares.

Based on 3Q08 results and prior to the conference call, we are lowering our FY08E and FY09E EPS expectations are $8.89 per share and $11.70 per share, respectively, down from $11.13 per share and $12.20 per share previously. The shares of Everest Re trade at 0.79x its 3Q08 book value of $82.02 per share.

Biogen Significantly Undervalued

Biogen (Nasdaq: BIIB) headquartered in Cambridge, Massachusetts posted solid results in the third quarter of 2008, despite the slowdown in Tysabri sales due to fears of PML. We think the Biogen core business will remain strong over the next several quarters. We believe that physicians are comfortable with the PML risk and that Tysabri forecasts will probably surprise to the upside in the next few quarters.

In the meantime, the name is significantly undervalued and would be a very attractive takeout candidate for a large-cap pharmaceutical company looking for a great phase III pipeline. We expect 2009 to be an eventful year on the pipeline front. As investors become more comfortable with both Tysabri trends and emerging pipeline, we believe shares will recover back into the high $50s.

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