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Alexza Pharmaceuticals, Unisys, Toyota, Altria and DeVry


Published on 2010-07-19 14:10:51 - Market Wire
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CHICAGO--([ BUSINESS WIRE ])--[ Zacks Equity Research ] highlights: Alexza Pharmaceuticals (Nasdaq: [ ALXA ]) as the Bull of the Day and Unisys Corp. (NYSE: [ UIS ]) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Toyota (NYSE: [ TM ]), Altria (NYSE: [ MO ]) and DeVry (NYSE: [ DV ]).

Full analysis of all these stocks is available at [ http://at.zacks.com/?id=2678 ].

Here is a synopsis of all five stocks:

[ Bull of the Day ]:

Alexza Pharmaceuticals (Nasdaq: [ ALXA ]) provided an update on the pipeline earlier this week. Management has selected AZ-007 as the next candidate to move forward. AZ-007 (Staccato zaleplon) will be developed for a potential middle-of-the-night dosing for nocturnal awakenings associated with insomnia.

It's a very attractive market opportunity in our view, and one that AZ-007 could be uniquely positioned to gain market share in if approved. Alexza's lead candidate, AZ-004 remains under U.S. FDA review with an action date schedule for October 11, 2010. We are big fans of the Staccato platform, and we believe that AZ-004 has the right combination of key attributes for the treatment of acute agitation that makes the product a $500 million opportunity.

We expect approval in October 2010. We believe the market is under-valuing the story here and believe $5 per share, a market cap of $250 million, more fairly represents the company.

[ Bear of the Day ]:

This year will remain tough for Unisys Corp. (NYSE: [ UIS ]) due to an uncertain spending environment. Although management is progressing in expanding margins, we remain cautiously optimistic on the pace of the IT spending recovery and the maturing of higher-margin legacy product sales and services.

The stock took a hit earlier due to the debt overhang and weak quarterly results. After recovering some of the ground lost in 2009, the stock is again going on a downslide, as is evident from the decline in stock price over the last three months. Estimates have also gone down significantly in that time.

The current 2010 earnings estimate is $1.41 per share, down from $2.27 in 90 days. Consequently, we are downgrading the stock to Underperform from Neutral ahead of the second quarter results, scheduled for July 27, 2010.

Latest Posts on the Zacks [ Analyst Blog ]:

Inflation or Deflation?

There are only a few areas of the economy that are showing any significant inflation. The most inflation is actually in the prices of used cars, which rose 0.9% in June and are up 16.1% over the last year.Prices of new cars, on the other hand, were up just 0.1% for the month and 1.3% year over year.That differential has to, at some point, be self-limiting. If it were to continue, eventually the price of a 2005 Toyota (NYSE: [ TM ]) Camry would exceed the price of a 2010 Camry.

The other area showing significantly higher prices is tobacco, where prices rose 1.0% in June on top of a 1.3% rise in May and are up 8.0% year over year. Yes, Altria (NYSE: [ MO ]) has more pricing flexibility than most firms, but most of those price increases are due to higher taxes, not just the tobacco companies jacking up prices on nicotine addicts.

Education is another area where prices are going up much more than in the overall economy, with prices rising by 0.4% in June and up 4.8% year over year.Most of the education market is either government run or non-profit, but the relatively high inflation in education might be an opportunity for some of the for-profit firms like DeVry (NYSE: [ DV ]).

So are we falling into deflation? At this point, given the rise at the core level, I would have to say no. However, that is clearly where the risk lies, not the risk of runaway inflation.

The low inflation will allow the Fed to keep interest rates low for a very long time, at a minimum through the end of this year, and perhaps well into 2011. If prices start to decline more, the Fed has to be ready to further increase the money supply through additional quantitative easing, such as buying more mortgage backed paper or longer term t-notes.

Deflation is an insidious force in the economy because it causes spending to slow dramatically. After all, why buy something now if it is going to be cheaper next month and even cheaper than that two months from now? When that starts to happen, goods start to pile up on the shelves, and then production has to slow down.That forces more people out of work and leads to even less demand.A self reinforcing downward spiral gets underway.

Not only that, but it raises the real interest rate, and debtors find it harder to come up with the cash to pay their debts, eventually leading them to default.Thus it is imperative that the Fed avoid deflation at all costs.We are not there yet, but we are coming too close for comfort.

Get the full analysis of all these stocks by going to [ 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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