(Source: Business Wire)
Zacks Equity Research picks China Life Insurance (NYSE: LFC) as Bull of the Day and Salix Pharmaceuticals (Nasdaq: SLXP) as Bear of the Day. In addition, the analysts at Zacks Equity Research discuss the latest on ArcelorMittal (NYSE: MT), AK Steel Holdings (NYSE: AKS) and BHP Billiton (NYSE: BHP).
Full analysis of all these stocks is available at: http://at.zacks.com/?id=2678
Bull of the Day
China Life Insurance (NYSE: LFC) is scheduled to release its FY08 financial results on March 26, 2009. 1H08 results were disappointing due to the stock market decline.
Despite growing competition as well as volatile capital market, China Life seems to be in a better position than its peers due to the current regulatory environment and its geographical positioning. Further, it has not yet successfully completed its conversion to higher margin products and its current valuation (more so after the recent sell-off) does not fully reflect its growth prospects, which we think have further improved in view of the China's stimulus package, as also the regulator's decision to allow the insurers to invest directly in the infrastructure projects.
We maintain our Buy recommendation on the shares. Based on our FY08 earnings estimate per ADS, the company is trading at 29.1x, which is much higher than the industry median. Our target price of $54.00 per ADS is based on the company selling in line with or above the insurance industry as a whole, and we have set a target P/E of approximately 31.8x our FY08 earnings estimate.
Bear of the Day
Salix Pharmaceuticals (Nasdaq: SLXP) is a specialty pharmaceutical company engaged in acquiring, developing and commercializing prescription drugs used in the treatment of a variety of gastrointestinal diseases.
The company suffered a major setback in December 2007 when the FDA granted approval to three generic versions of its lead product, Colazal. This is devastating news for Salix, as Colazal was a significant contributor to both the top-and bottom-line. Moreover, Salix failed to receive approval for its tablet version of Colazal in December 2008.
We expect the coming quarters to be challenging for the company. While new product launches and new indications for Xifaxan should support a recovery in revenues in 2009, we do not expect earnings to recover prior to 2010. We maintain a Sell rating with a target price of $5.
