Debt Risk at Emergency Medical

Emergency Medical Services Corporation (EMS) is a leading provider of emergency medical services in the United States, operating under the AMR and EmCare brands. The company reported better-than-expected 1Q08 net income of $17 million (up 2.2% year over year), or EPS of $0.40, versus net income of $16.6 million, or EPS of $0.39 in the first quarter of last year.

Despite an encouraging performance this quarter, which was buoyed by a strong flu season, we remain concerned with the company's high level of long-term debt and exposure to rising fuel costs given the 80 basis point year-over-year decrease in EBITDA margins in 1Q08. We maintain our Hold rating at current levels.

We have valued EMS on a forward price/earnings (P/E) basis, as well as a comparison to similar firms in the healthcare sector. We believe EMS is well positioned strategically to grow its primary AMR subsidiary and at the same time continue expanding its EmCare network.

However, we believe currently high levels of long-term debt will limit financial flexibility and increase the company's vulnerability to interest rate risk in the short term. Our $27 price target is derived using a P/E multiple of 17x FY08 EPS of $1.58.

Good Entry Point for SINA

For the first quarter of 2008, SINA Corporation's (SINA) revenue exceeded the market consensus while EPS met the market's expectations. This was in spite of the abnormally bad weather in China. SINA continued to do well in its online brand advertising and increased the gap between it and its closest competitor in the online brand ad market.

SINA is still one of the most well-known online brands in China. Moreover, the Beijing Olympic Games can significantly stimulate the online advertising business in China in the next several quarters. Therefore, we are maintaining our Buy rating for SINA.

The stock is currently trading at 40.0x our estimate for fiscal year 2008 earnings per share, which is slightly lower than the industry mean and higher than that of its closest Chinese competitors. The stock is also trading at 29.9x our estimate for fiscal year 2009 earnings per share, which is lower than the industry mean. Using a P/E multiple of approximately 36.5x our fiscal year 2009 earnings per share estimate yields a target price of $65.00, which we believe reflects the company's current prospects.

Shares of MBIA Still Overvalued

Core 1Q08 operating results for MBIA, Inc. (MBI) were a loss of $3.01 per share, substantially worse than our estimate for a loss of $0.30 per share. The bulk of the loss came through the unrealized pretax loss of $3.6 billion on the company's credit derivative portfolio and CDO.

The company also experienced a 43.1% drop in net premium written, the entry of Berkshire Hathaway will further intensify the competition. Though the company has managed to hold on to its AAA credit rating, with a negative outlook we remain concerned for further rating downgrade. Also, continued concerns for further deterioration in the mortgage markets should not bode well for results over the next several quarters.

Therefore, given the continued uncertainty for the group, we maintain a Sell rating. Our six-month price target of $8.10 per share, down from $10.00 per share, reflects a 0.90x multiple to our book value estimate of $9.00 per share at June 30, 2008. As a result, we are maintaining our Sell recommendation on the shares of MBI.

In addition, the quantitative Zacks Rank for MBI is currently 3, indicating no clear directional pressure on the shares over the near term. Short interest ratio is 9.3 days, versus 4.0 days previously.

Rockwell Automation Rocking (Well)

Rockwell Automation, Inc. (ROK) is a leading industrial automation company, providing power, control and information solutions to improve manufacturing capacity. The company reported second quarter EPS of $0.96, up 17.1% from the prior-year quarter, amid strong productivity performance, higher sales volume, and pricing gains.

Acquisitions are now providing more top-line boost, but at the cost of mitigating operating leverage. Management is confident that recent growth investments and international diversification will deliver FY08 revenue up 10-12%, with international sales expected to deliver mid-teens organic growth and North America accelerating modestly to mid-single-digits.

We reiterate our Buy rating on shares of ROK with a target price of $63.00 per share. The shares of Rockwell are currently trading at 12.9x our FY08 EPS estimate of $4.34, at a discount to the industry median multiple and its peer group. The company has a leadership position in the industrial automation space. Over the past several quarters, the company's financial performance has benefited from a number of items, including a falling U.S. dollar, strong productivity, and higher volume.