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.