Zacks Bull and Bear of the Day Highlights: Celgene, Talisman Energy, Coinstar, Netflix and Select Comfort
CHICAGO, Oct. 26, 2011 /PRNewswire/ -- Zacks Equity Research highlights Celgene Corporation (Nasdaq: CELG) as the Bull of the Day and Talisman Energy (NYSE: TLM) as the Bear of the Day. In addition, Zacks Equity Research provides analysis of Coinstar (Nasdaq: CSTR), Netflix (Nasdaq: NFLX) and Select Comfort (Nasdaq: SCSS).
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Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
We are upgrading Celgene Corporation (Nasdaq: CELG) to Outperform from Neutral following strong second quarter results delivered by the company and the decision of CHMP that the benefits associated with Revlimid outweigh the risks in multiple myeloma patients.
Celgene performed impressively in the second quarter of 2011 and beat the Zacks Consensus Estimate both in terms of revenues and earnings. Following the strong showing, Celgene upped its guidance for 2011. The stock has reacted favorably to the recent positive developments.
Celgene, driven by its oncology portfolio and robust pipeline, is expected to continue performing impressively. We believe that the current price represents an attractive entry point for long-term investors. Our target price is $80.00.
We are downgrading Talisman Energy (NYSE: TLM) shares to Underperform from Outperform following the cut in its annual production target for the second time in about two months. TLM expects repair work in the North Sea and weather-related issues in Canada to hurt operations and lower average output for 2011.
The dampened guidance, though not likely to alter volumes in a big way, raises questions about the company's sustainable operational efficiency and execution abilities. Low gas prices and falling oil prices are also causes for concern.
Given these headwinds, we expect shares of Talisman Energy to be under pressure in the near future. Our $12 price objective reflects a 2011 P/E multiple of 14.6x.
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Watching Movies in Bed
The seasonal bull market is in full force and it's a good time to profit with companies that will ring the register in the fourth quarter holiday shopping surge. Looking at stocks with top-ranked earnings growth in the Consumer Discretionary sector, I offer two interesting, and relaxing, names with solid potential.
Coinstar (Nasdaq: CSTR): This is my pick of the week. I think Redbox DVD sales growth continues to benefit from Netflix (Nasdaq: NFLX) subscriber frustration. People (myself included) love simplicity, convenience, and comprehensible, not just affordable, pricing.
And not everybody is streaming video at home. They like to stop at the cool-looking, tomato-colored kiosk on the way home from work, or while they are coming out of the store, or picking up the kids from school. I'm sure of the 33,000 kiosks there's gotta be some within 100 feet of a high school in some communities, especially now that they are offering video games!
Plus, we like to hold the movie disc in our hands. Watching movies is an entertainment event, whether you are going home to see it with your family, soulmate, or just your dog. We value what we can touch, and thus we perceive we get our money's worth with the movie we just watched that only cost a buck versus the endless content we may have access to online but never watch and forget how much we are paying for.
My take is that the current earnings growth estimates for Coinstar are conservative, given the Netflix defections they will continue to benefit from, piled on top of a steady consumer growth story. I am an aggressive buyer on any dips below $50 and will add as we breakout above $60.
Caveat: The Durbin legislation that will impact credit and debit card transactions could eventually cause Coinstar to raise fees on rentals. So what? My family will still pay $1.30 or $1.50 to watch the movie we want, when we want -- and we have Netflix streaming (which I never watch).
CSTR reports earnings Thursday October 27 and we will see what they say about their growth and opportunities -- especially since Netflix just reported moments ago that they lost 800,000 subscribers in the quarter!
Select Comfort (Nasdaq: SCSS): The king of custom comfort sleep just woke everybody up with their earnings last week, beating the street by 15%, and making it their fourth consecutive earnings surprise with an average beat of 30%. Shares sat up in bed over 30% in two days last week and marked a new 52-week high today above $22.
As our own Bill Wilton noted last week, the maker of the "Sleep Number" bed also went on to raise guidance because it sees double-digit revenue growth. This kind of management confidence is indeed very comforting -- unless you are short the stock and losing sleep.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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