For Immediate Release

Chicago, IL – March 12, 2010 – Zacks Equity Research highlights Skechers U.S.A. (SKX) as the Bull of the Day and ATS Medical, Inc. (ATSI) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Merck & Co. (MRK), GlaxoSmithKline (GSK) and Johnson & Johnson (JNJ).

Full analysis of all these stocks is available at

Here is a synopsis of all five stocks:

Bull of the Day:

Skechers U.S.A. (SKX) is well positioned to benefit through a sustained focus on new products, opening of new retail stores and distribution channels, and a multi-brand strategy.

A healthy balance sheet and in-demand inventory position it to capitalize on future growth opportunities. Further, the company’s international business provides an enormous second leg of growth, in our opinion. The company’s domestic wholesale business also regained its lost momentum.

With strong sales growth and healthy gross margins in fourth-quarter 2009, management expects the growth to continue in fiscal 2010. We upgrade our recommendation to Outperform and set a target price of $37 per share.

Bear of the Day:

ATS Medical, Inc. (ATSI) is one of the leading players in the mechanical heart valve market in the world. While mechanical heart valves are still growing in international markets, demand for this product is declining in the U.S. markets where tissue valves are more in favor.

We believe overseas markets will eventually adopt this trend, as well. Therefore, the company has started increasing its presence in the tissue valve market, and expanding its offering of complementary products has fueled ATS Medical’s growth.

In the fourth quarter, ATS Medical reported a loss of $0.05 per share, worse than the Zacks Consensus Estimate of loss per share of $0.01. Based on the company’s performance, we downgrade the stock to Underperform with a target price of $2.30, based on a price-to-sales ratio of 2.0x our fiscal 2010 sales estimate.

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Merck Estimates Revised Downward

Earnings estimates for Merck & Co. (MRK) are on the lower side following the release of fourth quarter and full-year 2009 results. The company’s earnings per share (EPS) came in at 79 cents (excluding non-recurring items), marginally beating the Zacks Consensus Estimate of 78 cents but lower than 87 cents reported in the year-ago period. Full-year earnings declined 5% to $3.25 per share.

Following the release of 2009 results, many analysts covering the stock have revised their estimates. Over the past 30 days, 9 of the 18 analysts following the stock have lowered their earnings estimates for fiscal 2010, with only 1 moving in the opposite direction. On balance, 2010 earnings estimates have gone down by 4 cents with the current Zacks Consensus Estimate being $3.43.

A negative bias, though not so prominent, can be witnessed for 2011 as well, with 5 of the 15 analysts covering the stock reducing their estimates in the past 30 days, with 4 analysts raising them. In the last 7 days, 1 analyst has raised estimates. On balance, 2011 earnings estimates have gone down by 2 cents with the current Zacks Consensus Estimate being $3.95. Although many of Merck’s drugs recorded robust growth during 2009, it is facing patent expiration of two of its key drugs, which has led analysts to lower their outlooks for the next few quarters.

The company’s hypertension franchise products, Cozaar (losartan potassium) and Hyzaar (Cozaar and hydrochlorothiazide), that generated sales of $3.6 billion in 2009 are slated to lose their patents in the U.S. and some of the major European markets in the first half of 2010. Sales are expected to plunge with the entry of generics. These drugs accounted for more than 13% of total revenues.

Meanwhile, Merck is witnessing a steady decline in sales of one of the most significant products in its portfolio, Gardasil — the cervical cancer vaccine. Although Gardasil (approved for the age group of 9-26 years) sales ramped very quickly following its launch, sales have struggled recently due to the difficulty in penetrating patients.

Global sales of the vaccine in 2009 came in at $1.1 billion, a 20% decline from the previous year. In addition, the vaccine is witnessing increased competition from GlaxoSmithKline’s (GSK) cervical cancer vaccine, Cervarix. However, in order to recoup some of the lost sales, Merck is aiming to get Gardasil approved for the age group of 26-45 years.

The negative bias in estimate revisions can be witnessed for the first two quarters of 2010 as well. For the first quarter, 4 of the 15 analysts covering the stock have reduced their estimates in the past 30 days with 2 doing the reverse.

However, we witness a clear negative trend for the second quarter of 2010, with 6 of the 13 analysts covering the stock lowering their estimates. No upward revision happened during the same period.

Another issue which is of concern to investors is related to the rights to Remicade and Simponi. Johnson & Johnson (JNJ) had licensed ex-U.S. rights of the drugs to Schering-Plough (now a part of Merck). According to J&J, the merger has triggered a change-of-control provision in the agreement allowing J&J to reclaim full rights to both drugs.

Get the full analysis of all these stocks by going to

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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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