Zacks Analyst Blog Highlights: Cache, Inc., WPP Group Plc., Companhia Vale do Rio Doce, Vertex Pharmaceuticals Inc. and Johnson & Johnson

Business Wire, Oct 29, 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: Cache, Inc. (Nasdaq: CACH), WPP Group Plc. (Nasdaq: WPPGY), Companhia Vale do Rio Doce (NYSE: RIO), Vertex Pharmaceuticals Inc. (Nasdaq: VRTX) and Johnson & Johnson (NYSE: JNJ).

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Here are highlights from Tuesday's Analyst Blog:

Cache Keeps Solid Balance Sheet

Cache Inc. (Nasdaq: CACH) reported third quarter results that were in-line with the company's lowered guidance from Sept 22. The company also said that its full-year 2008 guidance should come in at the low end of its previous expectations of sales of $278-$280 million and EPS of $0.28-$0.33.

We are leaving our fourth quarter estimates unchanged, but slightly lowering our 2009 estimates. Macro headwinds continue to pressure consumer spending, and in turn, Cache's sales trends remain weak.

WPP Group Ridiculously Cheap

We are maintaining our Buy recommendation on WPP Group (Nasdaq: WPPGY) after the half-year results. The company saw strong underlying growth with operating profit rising by 9.2% in constant currencies and the interim dividend has been increased by 20%. Underlying revenue growth for 2008 is expected to be even better than 2007, which was up 5%.

This year's results should benefit from the buildup to the U.S. presidential election, the Olympics in Beijing, along with the European Football Championships. While looking ahead to 2010, there are several sporting and political events that could help drive growth, including the soccer World Cup in South Africa, the Winter Olympics in Vancouver and the mid-term congressional elections in the U.S.

Vale do Rio Doce Downgraded

We are changing our recommendation on Companhia Vale do Rio Doce (NYSE: RIO) from Buy to Hold. RIO reported very positive numbers for the second and third quarters 2008. However, its share price has been under considerable pressure due to a more challenging international economic environment for cyclical industries like mining.

Vale do Rio Doce's current valuation already discounts a very strong worldwide economic recession. At this point, however, it is not clear how long this difficult economic environment will last.

Vertex Pharma Promising, Volatile

Vertex Pharmaceuticals Inc. (Nasdaq: VRTX) primarily focuses on developing drugs in areas of viral diseases, inflammation, autoimmune diseases and cancer, either independently or in association with other pharmaceutical companies.

In the third quarter, Vertex's total revenues came in at $31.6 million and consisted of $7.8 million in amortized royalties on the sold HIV franchise and $23.8 million in collaboration R&D and reimbursement revenues from Telaprevir development partner, Johnson & Johnson (NYSE: JNJ). GAAP net income for the third quarter was a loss of $130.0 million, or $0.82 per diluted share.

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