CHICAGO (Business Wire) -- Zacks Equity Research highlights Diamond Offshore (NYSE: DO) as the Bull of the Day and Merge Healthcare (Nasdaq: MRGE) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on St. Joe Company (NYSE: JOE), VeriSign, Inc. (Nasdaq: VRSN) and SGX Pharmaceuticals (Nasdaq: SGXP). 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: Diamond Offshore (NYSE: DO)
We are maintaining our Buy recommendation and price objective on Diamond Offshore shares ahead of the company's second-quarter results. Our continued favorable view of the company reflects its strong leverage to the favorable deepwater drilling outlook. With a backlog of $11 billion, Diamond offers a solid level of earnings and cash flow visibility.
Bear of the Day: Merge Healthcare (Nasdaq: MRGE)
The FDA regulates computer software applications as medical devices when they are labeled or intended to be used in the diagnosis of disease or other conditions. Merge could be subject to increased requirements and if Merge software is deemed not meet quality standards, they may be prevented from marketing their products. The healthcare industry is also subject to changing political and economic considerations, particularly related to changes in reimbursement.
Latest Posts on the Zacks Analyst Blog:
St. Joe Company (NYSE: JOE)
We are still concerned about the massive slowdown in St. Joe's residential business and JOE's ability to generate operating cash flow in a tough environment for residential developers. JOE continues to reduce headcounts and cap ex spending in response to a rapidly deteriorating residential Florida real estate market. There are no signs that the housing situation will get better in the next six months, and we think the worst is yet to come.
The company has paid off most of its debt, a prudent move in a declining economic environment. In addition, JOE has a strong development pipeline with multiple projects that will come on line in the next couple of years. When residential markets rebound, JOE will be well-positioned with a diverse array of projects at various price points.
VeriSign, Inc. (Nasdaq: VRSN)
We are maintaining our Hold recommendation on the shares of VeriSign. The company reported revenue of $223 million, up 23% y/y. Pro-forma EPS of $0.21 was $0.01 above consensus. Stronger-than-expected EBIT margins of 30.3% were mitigated by higher net interest expense (lower rates, less cash).
The management indicated that three non-core businesses have already been divested year-to-date, and the company remains on track to divest the remaining businesses by year-end. VeriSign's solid DNS and SSL Cert franchises should benefit from a few key drivers over the next few years. As the Internet spreads to mobile devices, we see VeriSign tapping this growth market with an array of value-added services.
SGX Pharmaceuticals (Nasdaq: SGXP)
The company filed an Investigational New Drug (IND) application for SGX393, a potent inhibitor of the T315I mutant, in June while the IND for SGX126, its experimental cancer drug, will be filed in the first quarter, next year. Although the future of the Troxatyl franchise is uncertain, we believe the FAST technology is a viable one and will be the company's long term growth driver.
We are impressed with the definitive merger agreement signed with Eli Lilly. The acquisition will allow the management to leverage Lilly's research and development expertise with SGX Pharma's scientific expertise in utilizing structural biological activities for the development of innovative treatments. We expect the company's share price to trade at or near the acquisition price quoted by Lilly. As such, we maintain our target price of $3.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
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