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Zacks Bull and Bear of the Day Highlights: Cypress Biosciences, KeyCorp, Bristol-Myers, Diamond Offshore and Johnson & Johnson

^{Published on 2008-12-22 21:20:21, Last Modified on 2008-12-22 21:21:54 - Market Wire}
 

CHICAGO--([ BUSINESS WIRE ])--Zacks Equity Research highlights Cypress Biosciences (Nasdaq: CYPR) as the Bull of the Day and KeyCorp (NYSE: KEY) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Bristol-Myers Squibb, Inc. (NYSE: BMY), Diamond Offshore Drilling (NYSE: DO) and Johnson & Johnson (NYSE: JNJ).

Full analysis of all these stocks is available at [ http://at.zacks.com/?id=2676 ].

Here is a synopsis of all five stocks:

Bull of the Day: Cypress Biosciences (Nasdaq: CYPR)

With a data from a third positive phase III trial in fibromyalgia released in early December 2008, we are feeling confident that the FDA will approval Cypress Bioscience's and partnerForest Labs'milnacipran product during the first quarter of 2009.

Approval of milnacipran will be a transformational event for Cypress. The company should become almost immediately profitable based on royalties from Forest Labs. By 2013 we see total revenues exceeding $110 million, with net margins above 50%.

We see fair value at $12 per share, or 25x our 2012 EPS estimate of $1.12 per share, discounted back to present day.

Bear of the Day: KeyCorp (NYSE: KEY)

KeyCorp's 3Q08 loss from continuing operations came in at $0.10 per share, substantially worse than the estimates. The lower-than-expected results mainly stemmed from a steep rise in loan loss provisions and an adverse impact of derivative contract losses.

However, positive trends were visible in some fee-based businesses and the expenses remained well controlled. Also, the Community Banking group continues to perform well. Credit quality was mixed during the quarter.

Though the company has taken steps to reduce its exposure to the Commercial Real Estate (CRE) home builders segment, we anticipate higher losses in CRE portfolio in the coming quarters in view of its sizeable exposure to risky markets. As such, we are maintaining our Sell rating on the shares of KEY, with a six-month price target of $7.50 per share.

Latest Posts on the Zacks Analyst Blog:

Bristol-Myers Squibb, Inc. (NYSE: BMY)

Bristol-Myers Squibbremains one of our top-picks in the pharmaceutical industry for 2009. We like Bristol for a number of reasons, including the company's solid financial position, a deep pipeline with significant biologic exposure, and turnaround/acquisition potential.

Bristol also offers a big dividend of $1.24 per share (recently confirmed Thursday), which yields 5.5%. The company has the lowest exposure to foreign exchange translation among its U.S. peers, and is expected to grow the bottom-line by approximately 11% CAGR [compound annual growth rate] through 2012.

Diamond Offshore Drilling (NYSE: DO)

Houston, Texas-based Diamond Offshoreis a major contract driller, providing comprehensive offshore drilling services to the global energy industry. The company's drilling fleet consists of 30 semi-submersibles (9 of these are high-specification rigs, capable of providing deepwater drilling services), 15 jackups (including the recently delivered Ocean Shield and Ocean Scepter), and a dynamically positioned drillship.

Our continued favorable view of Diamond shares reflects the company's strong leverage to the still positive outlook for deepwater drilling despite the pullback in oil prices and continued credit market turmoil. The company's $11.5 billion backlog provides for a very high level of earnings and cash flow visibility.

Johnson & Johnson (NYSE: JNJ)

Johnson & Johnson is one of the world's largest providers of healthcare products in the consumer, pharmaceutical and medical devices market. It has over 200 operating companies around the world and sells its products in more than 175 countries. J&J has an enormously diverse revenue stream consisting of market leading products in all three of its business segments.

Due to a number of products expected to experience declining sales, revenue growth in the next few years will likely slow relative to 2007. Incremental earnings growth will come in the form of improving margins and share buybacks. J&J's consistency, product diversity and financial stability make it a very attractive holding in this turbulent market.

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: [ http://at.zacks.com/?id=2649 ].

About the Bull and Bear of the Day

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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