Health & Fitness
Health and Fitness
Health and Fitness
Tue, January 27, 2009 Zacks Bull & Bear of the Day Highlights: Onyx Pharmaceuticals, Newfield Exploration, D.R. Horton, KB Home and MGIC
CHICAGO--([ BUSINESS WIRE ])--Zacks Equity Research picks Onyx Pharmaceuticals, Inc. (NASDAQ: [ ONXX ]) as Bull of the Day and Newfield Exploration (NYSE: [ NFX ]) as Bear of the Day. In addition, the analysts at Zacks Equity Research discuss the latest on D.R. Horton (NYSE: [ DHI ]), KB Home (NYSE: [ KBH ]) and MGIC (NYSE: [ MTG ]).
Full analysis of all these stocks is available at: [ http://at.zacks.com/?id=2678 ]
Bull of the Day
Onyx Pharmaceuticals, Inc. ([ ONXX ]) is engaged in the development of novel cancer therapies that target the molecular basis of cancer. With its collaborator Bayer Healthcare, the company develops the small molecule drug Nexavar (sorafenib).
Nexavar sales in the third quarter of 2008 remained strong. This is mainly attributed to the market penetration in the liver cancer market, while Nexavar market share in kidney cancer market has stabilized due to heavy competition from Pfizer and Wyeth.
We expect continued Nexavar sales growth in 4Q08 and over the next several years since the label has expanded to liver cancer. In addition to the U.S. and E.U., Nexavar has been approved in South Korea and China for liver cancer. Nexavar has the potential to become a blockbuster. We maintain our Buy rating on Onyx shares with a price target of $45 per shares.
Bear of the Day
Newfield Exploration (NYSE: [ NFX ]), based in Houston, Texas, is an independent energy company engaged in the exploration and production (E&P) of crude oil and natural gas. In an asset-diversification strategy, management has turned what was once an exclusive concentration in the Gulf of Mexico into a balanced portfolio.
We are downgrading Newfield shares to Sell from Buy to reflect the company's weak competitive position in the current unfavorable macro backdrop. We believe that the Newfield asset portfolio centered around the Rockies and Gulf Coast regions are lacking in a meaningful exposure to the emerging shale plays.
Thus, it is not suited for the current environment of low commodity prices and restricted access to capital. We have also reduced our estimates to reflect a lower commodity price deck.
Recent Analysis from the Analyst Blog
Wow! Good News in Housing
The improvement in sales happened for both single-family homes (up 7.0% month over month but down 1.4% year over year) and for condos (up 2.1% month over month but down 18.4% year over year). The Northeast was the only region that did not see an increase in sales on a month over month basis, falling 1.4%, and down 14.3% year over year. It has also seen the least deterioration in median price over the last year, down 7.8% to $235,000. The Northeast is the smallest region of the country in terms of housing.
The West had the biggest improvement, with sales up 13.6% on a month-over-month basis, and up 31.6% year over year. However, it also had the largest drop in median price of 31.5% to $213,100. The South, which has by far the most home sales, posted the next best performance, with sales up 7.4% on a month-over-month basis, but down 11.2% year over year. The median price in that region is down 8.0% year over year to $158,600. The Midwest was up 4.0% month over month and is down 10.3% year over year. It is the cheapest region with a median home price of $140,800, down 11.4% from a year ago.
This shows that the market does work -- if prices get low enough, people will buy. Lower prices are not without costs, most significantly the wiping out of the equity of millions of Americans. I don't think the decline in home prices is over, but perhaps this is at least the end of the beginning.
While there seems to be a little bit of light at the end of the tunnel, it still strikes me as too early to jump into the Homebuilders like D.R. Horton (NYSE: [ DHI ]) and KB Home (NYSE: [ KBH ]). The decline in home prices is also a significant negative to the Private Mortgage Insurance firms like MGIC (NYSE: [ MTG ]).
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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.
About the Analyst Blog
Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.
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