Zacks Bull and Bear of the Day Highlights: OmniVision Technologies, BioScrip, McDonald, Halliburton and Schlumberger

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Jan 25, 2011, 10:29 ET

CHICAGO, Jan. 25, 2011 /PRNewswire/ -- Zacks Equity Research highlights: OmniVision Technologies (Nasdaq: OVTI) as the Bull of the Day and BioScrip, Inc. (Nasdaq: BIOS) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on McDonald Corporation (NYSE: MCD), Halliburton Co. (NYSE: HAL) and Schlumberger Ltd. (NYSE: SLB).

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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:

Bull of the Day:

OmniVision Technologies (Nasdaq: OVTI) is an OEM of CMOS image sensors and support circuitry used within handsets, notebooks and other mass markets. Second quarter earnings were much better than the Zacks Consensus, and the flattish guidance for the next quarter appears to be much better than normal seasonality.

The company has leveraged its superior technology to solidify its position in the handset market and also expand into other areas. We like its product roadmap, growth prospects and management execution, and believe that it will be able to deal with the short product life cycles, temporary slowdown in the computing market and stay ahead of the stiff competition in its served markets.

We are therefore upgrading OVTI shares to Outperform, which indicates that we expect the company to outperform the market in the next three to six months. Our $34.00 target price (20.7 P/E), reflects this view.

Bear of the Day:

BioScrip, Inc. (Nasdaq: BIOS) posted a disappointing quarter based on higher costs and tax. Although revenues grew by double-digits, driven by the CHS acquisition, the organic growth was below expectation.

Several issues spanning from manufacturer related, product recall and others impacted the company's margin during the quarter. On top of these issues, the highly leveraged balance sheet continues to be a drag on the bottom line. The company's interest expense increased substantially during the quarter based on its high debt level.

Amidst the backdrop of uncertainty, BioScrip has presently kept its outlook on hold. Given these factors, we would prefer to avoid the stock for the time being until further clarity is available regarding its future prospects. Accordingly, we downgrade the stock to Underperform.

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McDonald's Reports In Line

McDonald's Corporation (NYSE: MCD), the world's largest hamburger chain, posted fourth quarter 2010 earnings of $1.16 per share, in line with the Zacks Consensus Estimate. Fourth quarter earnings increased 5% from $1.11 per share reported in the prior-year quarter. However, excluding the unfavorable currency impact of 2 cents in the reported quarter, earnings grew 6.0% year over year.

The earnings growth was driven by value offerings and premium products along with a rise in comparable-store sales across all regions. The company also benefited from its renovation strategy and new menu offerings, which drove higher traffic in the reported quarter.

The company's full-year earnings per share were $4.58 versus $4.11 in full fiscal 2009.

Outlook

The company expects the positive trend to continue in 2011, and January global comparable sales to consequently increase in the range of 4% to 5%.

Our Take

McDonald's continues to grow same-store sales while maintaining healthy margins. We believe, over the next few quarters, revenues will grow through unit expansion and strong comps momentum.

Based on a strong balance sheet and consistent earnings, the stock provides relative safety and moderate growth prospects due to its exposure to faster-growing international markets. Moreover, the franchising strategy that is predominant in McDonald's business model helps drive steady cash flow streams, solid margins and returns.

However, stiff competition from other quick-service restaurant operators and macroeconomic factors influencing consumer spending patterns still remain areas of concern.

Consequently, we have a Zacks #3 Rank (short-term Hold recommendation) on the shares. We also reiterate our long-term Neutral rating.

Halliburton Posts Big Gain

Major oilfield services provider Halliburton Co. (NYSE: HAL) reported better-than-anticipated fourth-quarter 2010 results. This was helped by the strength and sustainability of the all-important North American onshore activity levels (to which the company is heavily exposed through its market-share-leading pressure-pumping business).

Earnings per share, excluding special items, came in at 68 cents, beating the Zacks Consensus Estimate of 63 cents and were comfortably ahead of the year-ago adjusted profit of 28 cents.

Revenues of $5.2 billion were 40.0% greater than that achieved during the fourth quarter of 2009 and also surpassed the Zacks Consensus Estimate of $4.9 billion, as sales increased across the company's business units.

During the quarter, North America accounted for approximately 51% of Halliburton's total revenues and 61% of its operating income.

Outlook

Halliburton management pointed out that fourth quarter profitability was driven by strong demand for its services in North America and improvement in activity in a number of international markets including Norway, West Africa, Iraq and Algeria.

The world's second-largest oilfield services company after Schlumberger Ltd. (NYSE: SLB) believes that bullish near-term U.S. land drilling trends, where activity is being driven by horizontal drilling and liquids-rich plays, were able to make up for the decrease in activity in the Gulf of Mexico.

Going forward, Halliburton anticipates benefiting from pricing improvements in select North American basins, as operators continue to make the exploitation of unconventional resources the focus of their investment. At the same time, the company expects international activity to continue increasing.

Even though Halliburton has a Zacks #2 Rank (short-term Buy rating) in the short run, we are Neutral on the shares in the longer term.

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.

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