Zacks Analyst Blog Highlights: Isis Pharmaceuticals, Inc., Schering-Plough Corp., Sara Lee Corp., EnCana Corp. and Euroseas Ltd

Business Wire, Sept 24, 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: Isis Pharmaceuticals, Inc. (Nasdaq: ISIS), Schering-Plough Corp. (NYSE: SGP), Sara Lee Corp. (NYSE: SLE), EnCana Corp. (NYSE: ECA) and Euroseas Ltd. (Nasdaq: ESEA).

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Here are highlights from Tuesday's Analyst Blog:

Isis Pharma Our Top Biotech

Isis Pharmaceuticals, Inc. (Nasdaq: ISIS) is a drug discovery and development company focused on the therapeutic target RNA and developing products from RNA-based technologies, such as antisense. Antisense drugs are the first class of drugs targeted to control expression of genes through interactions with RNA. Beyond antisense, Isis scientists have created another technology that exploits their knowledge of RNA.

We are reiterating our rating on Isis Pharmaceuticals of a Buy and increasing our price target to $22. We believe that antisense technology represents an exciting and potentially revolutionary platform for developing therapeutic candidates to treat a wide margin of diseases. In our view, antisense as a platform is today where biologics were ten years ago.

Schering Now Must Cut Costs

Schering-Plough Corp.'s (NYSE: SGP) recent prescription flight of Vytorin/Zetia prompted the management to implement an aggressive cost-cutting initiative. We expect sales of Vytorin and Zetia to continue to suffer. Significant near-term risks linger but the addition of Organon and the new cost-cutting strategy should help EPS growth. Aside from the problems with the cholesterol business, Schering-Plough does offer compelling reasons for investors to remain interested.

The stock currently trades at 11.6x our 2008 EPS estimate of $1.59. While this is a discount to the industry average of 13.6x, based on the significant near-term risks, we believe the discount is justified. We see fair value at $21, or about 13.2x our 2008 EPS estimate of $1.59.

Sara Lee Keeps Its Buy Rating

Sara Lee Corporation (NYSE: SLE) is a global consumer packaged goods company that manufactures and markets a diverse array of branded products. In fiscal 2008, the company reported results in six business segments: International Beverage (24%), North American Retail Meats (18%), Household & Body Care (17%), North American Retail Bakery (17%), Foodservice (17%) and International Bakery (7%).

Sara Lee implemented The Transformation Plan to create a focused consumer brand company generating sales growth in the range of 4% to 5% and earnings growth in the range of 5% to 8% by 2010. The Plan was announced over two and one half years ago and positive year-over-year EPS comparisons are now expected.

EnCana Upgraded to a Buy

EnCana Corporation (NYSE: ECA), based in Calgary, Alberta, is a major oil and gas exploration and production (E&P) company formed through the 2002 merger of PanCanadian Energy Corporation and Alberta Energy Corporation. EnCana is the largest independent natural gas producer of North America, with volumes of 3.57 billion cubic feet per day (Bcf/d) in 2007.

We have upgraded EnCana shares to Buy from Hold following the stock's recent pullback on the back of commodity price weakness. This has made valuation very compelling, in our view. Recently, the company added significant acreage in the Haynesville and Horn River shale plays, two of the most promising shale plays in North America.

Euroseas Target Initially $10

Euroseas Ltd. (Nasdaq: ESEA), incorporated in May 2005, was formed to consolidate the ship-owning interests of the Pittas family of Athens, Greece, which has been in the shipping business over the past 136 years. The company owns and operates drybulk carriers that transport major bulks, such as iron ore, coal, and grains, and minor bulks, such as bauxite, phosphate, and fertilizers.

Our initial diluted EPS estimates are $1.83 for 2008 and $1.70 for 2009. We expect results to continue to benefit from historically high rates and the company's large percentage of vessels covered by fixed period charters. We believe the dividend is safe.

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