For Immediate Release
Chicago, IL – June 19, 2009 – Zacks Equity Research highlights Allion Healthcare Inc. (ALLI) as the Bull of the Day and Embarq (EQ) the Bear of the Day. In addition, Zacks Equity Research provides analysis on EnCana (ECA), XTO Energy (XTO) and Chesapeake (CHK).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2676.
Here is a synopsis of all five stocks:
Allion Healthcare Inc. (ALLI) is a national provider of specialty pharmacy and disease management services focused on HIV/AIDS patients. The company recently reported better-than-expected 1Q09 net income of $3.5M, or EPS of $0.13, compared with net income of $1.1M and EPS of $0.06 in 1Q08.
Organic growth in 1Q09 of the company’s core Specialty HIV was 9% y/y, with the aggregate number of Specialty HIV prescriptions filled in 4Q08 tallying 265,455, an increase of 3.7% y/y.
We believe current initiatives, such as the partnering with large AIDS service organizations in Seattle, for example, bodes well for increased volume growth over the short term. We maintain our BUY rating at current levels.
We maintain our Sell rating for Embarq (EQ), the fourth largest local telephone service provider in the U.S., as access line loss continues to erode traditional voice revenue, largely resulting in decreasing consolidated sales in the last quarter (below our expectations). Line losses have been accelerated with deactivations among business customers due to weak economic conditions.
EQ has received shareholder approval as well as the required state regulatory authorization for its consolidation with CenturyTel under an $11.6 billion merger deal (expected to close in 2Q 2009). We believe that the local phone business in North America, in particular service offered by regional carriers, has significant challenges ahead as consumers and business customers migrate to alternative solutions including VoIP, wireless and cable offerings.
Lower revenue forecasts for the second quarter of 2009 coupled with sustained access line losses support our thesis. We also believe pricing pressure and the need to invest further in broadband infrastructure may strain balance sheet conditions, considering EQ’s limited liquidity and significant debt level.
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Another Natural Gas Build
The storage overhang in the U.S. natural gas market shows no sign of easing. With domestic production continuing to outpace recession-hit demand, despite the sharp retrenchment in the rig count, the commodity appears to be on track to exit the summer injection season with an all-time high storage build. Today’s bearish report is expected to stall, if not altogether reverse, the emerging strength in natural gas prices over the last few days that pushed it above the $4 mark.
To play this natural gas outlook, we continue to rely primarily on select E&P players such as EnCana (ECA), XTO Energy (XTO) and Chesapeake (CHK) who have the bulk of this year’s production hedged at attractive prices and have access to resource-rich assets can be profitably operated in the current low-price environment.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
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