(PTEN) - company's ROE more than doubles that of the industry average

Patterson-UTI Energy, Inc. (PTEN), a Zacks #1 Rank stock, has a history of topping the Street's earnings estimates, having done so for seven straight quarters. Earnings per share are forecasted to grow 44.0% over the next 3-5 years. Analysts' earnings estimates have been trending higher. The company's ROE more than doubles that of the industry average. The Board of Directors at PTEN recently doubled its quarterly cash dividend. Full Analysis Patterson-UTI Energy, Inc. provides onshore contract drilling services to exploration and production companies in North America. The company is also engaged in the businesses of pressure pumping services and drilling and completion fluid services. PTEN exceeded analysts' earnings estimates for the past seven quarters by an average margin of 10.3%. Earnings per share grew an impressive 35.7% over the past five years and are projected to grow by an even larger rate going forward—44.0% over the next 3-5 years. On May 3, 2006, PTEN reported 2006 first-quarter profits of $159.3 million, or 91 cents per share. With analysts expecting 83 cents per share, the company surprised to the upside by 9.6%. Earnings per share in the prior-year period amounted to 35 cents per share. Revenues ballooned 70.5% to $597.7 million, compared to $350.6 million for the first quarter of 2005. The company increased revenues, expanded gross margins and grew profits for the past three years. The consensus earnings estimates for this quarter and next quarter increased 13.4% and 14.6%, respectively, over the past 60 days. Profit forecasts for this year and next year jumped 14.8% and 11.1%, respectively, over the same time period. Eight analysts covering the stock upped their estimates for both this quarter and next. Nine analysts revised their estimates upward for this year, while seven followed suit for next year. Looking ahead, PTEN plans to maintain its program of activating approximately 30 drilling rigs during 2006, including seven that have been activated year-to-date. The company's rig count increased sequentially from the fourth quarter of 2005. As of Mar 31, 2006, PTEN had approximately $253 million in cash and cash equivalents. The Board of Directors at PTEN recently approved a doubling of its quarterly cash dividend to eight cents per share. The dividend is to be paid to stockholders of record as of Jun 15, 2006 and will be paid on Jun 30, 2006. PTEN has a current dividend yield of 0.47%. The Board also announced that it purchased 1.25 million shares of the company's common stock during April 2006 at a cost of approximately $41 million. PTEN's return on equity more than doubles that of the industry average—38% compared to 16%. The company has a price-to-book (P/B) multiple of 3.8. The market's P/B multiple, represented by the S&P 500, currently stands at 4.4. Moreover, the stock trades at a valuation of 12.1x trailing 12-month earnings and at 8.7x its current fiscal-year estimated earnings. The market is trading at a valuation of 17.3x trailing 12-month earnings and at 16.1x its current fiscal-year estimated earnings. The company has a PEG ratio of 0.20. Note: The Zacks Rank is a very sensitive indicator that can change frequently for an individual stock. The ranks are updated every Monday morning on Zacks.com. As such, it is prudent to check the site for the latest Zacks Rank on the stocks highlighted in this section. Simply click the link for the stock or enter the symbol in the ticker entry box in the upper left hand corner of the web site. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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(IR) - makes a habit of topping analysts' earnings expectations

Ingersoll-Rand Company Limited (IR) recently announced record earnings and revenues for the first quarter of 2006. The company topped the Street's earnings estimate for nine consecutive quarters. Earnings per share are projected to grow 11.8% over the next 3-5 years. IR raised its full-year 2006 earnings per share guidance in late April. The company has a current dividend yield of 1.3% and a five-year average dividend yield of 1.5%. Full Analysis Ingersoll-Rand Company Limited operates in five business segments: climate control technologies, compact vehicle technologies, construction technologies, industrial technologies and security technologies. Beginning with predecessor companies, the company has participated in the world's construction and mining industries since 1871. IR makes a habit of topping analysts' earnings expectations, having done so for the past nine quarters by an average margin of 6.7%. Earnings per share grew 27.4% over the past five years and are forecasted to grow 11.8% over the next 3-5 years. On Apr 21, 2006, IR announced record earnings and revenues for the first quarter of 2006. Earnings per share of 79 cents beat the Street's estimate by 8.2% and eclipsed its prior-year profits by 17.9%. Revenues rose 10.2% to $2.71 billion, compared with $2.46 billion in the first quarter of 2005. The company stated that all of its business segments achieved revenue and earnings growth and improved operating margins compared with the first quarter of last year. Based on its impressive first quarter, IR upped its full-year 2006 earnings per share outlook. The company now expects profits between $3.42 and $3.52 per share. Earnings from continuing operations are projected between $3.50 and $3.60 per share. Over the past month, six analysts covering the stock submitted upward estimate revisions for 2006. Five analysts upped their estimates for 2007. Going forward, the company intends to commit resources to continue its product development and expansion into high growth markets—such as China and India. IR is likely to generate robust free cash flow in excess of $800 million during the current fiscal year. The company has a current dividend yield of 1.3% and a five-year average dividend yield of 1.5%. IR is a Zacks #2 Rank (Buy) stock. Zacks #2 Rank stocks have generated an average annual return of 22.0% since 1988. Because the Zacks Rank has a market cap bias, Growth & Income investors may find a greater number of large-cap stocks by considering both Zacks #1 Rank (Strong Buy) and Zacks #2 Rank (Buy) stocks in their selection criteria. Note: The Zacks Rank is a very sensitive indicator that can change frequently for an individual stock. The ranks are updated every Monday morning on Zacks.com. As such, it is prudent to check the site for the latest Zacks Rank on the stocks highlighted in this section. Simply click the link for the stock or enter the symbol in the ticker entry box in the upper left hand corner of the web site. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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(CTS) - latest quarter registering a 100% upside surprise

CTS Corporation (CTS) has met or exceeded earnings estimates in nine out of the past 10 quarters, with the latest quarter registering a 100% upside surprise. Three analysts raised their numbers for 2006, while two did the same for 2007. Over the past 30 days, estimates for 2006 have increased 8.6% to 76 cents per share. Full Analysis CTS Corporation engages in the design, manufacture, assembly, and sale of electronic components and sensors, and also provides electronics manufacturing services. The company operates in two segments, Electronics Manufacturing Services, and Components and Sensors. The company sells its products through sales engineers, independent manufacturer's representatives, and distributors in China, Hong Kong, Japan, Scotland, Singapore, Taiwan, and the United States. CTS reported an excellent first quarter and guided higher for the future. Earnings per share of 20 cents doubled the consensus estimate and soundly beat last year's result of nine cents. Chief Executive Donald Schwanz was pleased with the quarter: "CTS demonstrated solid growth in automotive products and component sales for infrastructure applications. We are also very pleased with our strong first quarter earnings, which reflect improved business mix as well as the benefits of continued cost reduction." Due to strong business trends, management now expects full-year earnings to come in between 75 cents and 80 cents per share, up from prior estimates of 70 cents per share. The company is additionally forecasting sales growth of approximately 8% over 2005. CTS has met or exceeded earnings estimates in nine out of the past 10 quarters, with the latest quarter registering a 100% upside surprise. Three analysts raised their numbers for 2006, while two did the same for 2007. Over the past 30 days, estimates for 2006 have increased 8.6% to 76 cents per share. The stock is attractively valued at 17x next year's estimates of 86 cents per share, well below the long-term growth rate of 29.25%, giving the stock a PEG ratio of 0.58. Note: The Zacks Rank is a very sensitive indicator that can change frequently for an individual stock. The ranks are updated every Monday morning on Zacks.com. As such, it is prudent to check the site for the latest Zacks Rank on the stocks highlighted in this section. Simply click the link for the stock or enter the symbol in the ticker entry box in the upper left hand corner of the web site. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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(BAS) - 12.7% positive surprise over analysts consensus

Basic Energy Services (BAS), a Zacks #1 Rank Stock, is making new highs. Background Basic Energy Services provides a range of services to America's oil and gas producers. The company's operations span the heartland of domestic onshore production from Texas, Oklahoma , Louisiana and New Mexico to the Rocky Mountain states. The company's services support the entire life cycle of a well - from drilling to production and finally - abandonment. Full Analysis BAS reported earnings for the first quarter of 53 cents per share, a 12.7% positive surprise over analysts consensus. Sales were reported at $154.3 million and income at $19.7 million. Because BAS went public in the Fall of 2005, there is no comparable year-ago data. BAS has benefited, along with other energy support companies, from higher crude oil prices. After the release of first quarter earnings, BAS made historic highs, but failed to close in new high ground on the day of the report. Wednesday, the stock was able to make a new high close on volume that was more than twice normal. BAS, because of its relative newness, is still an under-followed stock. In addition, the stock is trading at all time highs. Obviously there is no overhead resistance in this stock and it is still trying to find a fair value in the market. Now add to that mix that the stock is in a hot sector and improving earnings. This combines to give us an interesting scenario where a stock has good momentum to the upside. For the time being, the line of least resistance for BAS is to the upside. Note: The Zacks Rank is a very sensitive indicator that can change frequently for an individual stock. The ranks are updated every Monday morning on Zacks.com. As such, it is prudent to check the site for the latest Zacks Rank on the stocks highlighted in this section. Simply click the link for the stock or enter the symbol in the ticker entry box in the upper left hand corner of the web site. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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(CAT) - ROE of 37%, compared to the industry average of 24%

Caterpillar, Inc. (CAT) recently announced record first-quarter profits and revenues. Earnings per share are projected to grow 14.5% over the next 3-5 years. The company has exceeded analysts' earnings estimates in four out of the past five quarters. CAT has a ROE of 37%, compared to the industry average of 24%. The company has a current dividend yield of 1.2% and a five-year average dividend yield of 2.3%. Full Analysis Caterpillar, Inc. manufactures construction and mining equipment, diesel and natural gas engines and industrial gas turbines. The company operates in three primary lines of business: machinery, engines and financial products. CAT topped analysts' earnings expectations in four out of the past five quarters by an average margin of 11.9%. Earnings per share grew 33.8% over the past five years and are forecasted to grow 14.5% over the next 3-5 years. On Apr 24, 2006, CAT's earnings per share of $1.20 for the first quarter of 2006 amounted to a new record, which topped the Street's estimate by 14.3% and soared past its profits in the prior-year period by 48.2%. Furthermore, the company reported record revenues of $9.4 billion, compared with $8.3 billion in the first quarter of 2005. CAT increased revenues, expanded gross margins and grew profits for the past three years. Strong underlying business conditions and demand for its products, coupled with the fundamental strength of the industries it serves, prompted CAT to raise its full-year 2006 earnings per share guidance. The company now expects profits between $4.85 and $5.20 per share. CAT previously projected earnings per share between $4.65 and $5.00. The company also reaffirmed its 2006 revenue guidance to be around $40 billion. Analysts' earnings estimates have been trending higher for CAT. Profits forecasts for this quarter and next quarter jumped 4.4% and 3.3%, respectively, over the past 60 days. The consensus earnings estimates for this year and next year are up 6.2% and 5.3%, respectively, over the same time period. Five analysts covering the stock upped their estimates for this quarter, while three did so for next quarter. Eight analysts submitted upward revisions for the full year of 2006, while four have done so for 2007. On Apr 12, 2006, the Board of Directors at CAT announced a quarterly cash dividend of 25 cents per share on its common stock, payable May 20, 2006, to stockholders of record at the close of business Apr 24, 2006. The company is currently yielding 1.2% and has a five-year average dividend yield of 2.3%. Not only is CAT's return on equity on its own extremely impressive, it crushes the industry average. The company's ROE is 37%, compared to the industry average of 24%. CAT is a Zacks #2 Rank (Buy) stock. Zacks #2 Rank stocks have generated an average annual return of 22.0% since 1988. Because the Zacks Rank has a market cap bias, Growth & Income investors may find a greater number of large-cap stocks by considering both Zacks #1 Rank (Strong Buy) and Zacks #2 Rank (Buy) stocks in their selection criteria. Note: The Zacks Rank is a very sensitive indicator that can change frequently for an individual stock. The ranks are updated every Monday morning on Zacks.com. As such, it is prudent to check the site for the latest Zacks Rank on the stocks highlighted in this section. Simply click the link for the stock or enter the symbol in the ticker entry box in the upper left hand corner of the web site. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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(IMOS) - Earnings per share are forecasted to grow 25.0%

ChipMOS Technologies Ltd. (IMOS), a Zacks #1 Rank stock, recently topped the Street's earnings estimate by 22.7%. Earnings per share are forecasted to grow 25.0% over the next 3-5 years. Analysts' earnings estimates have been trending higher. The company's ROE doubles that of the industry average. IMOS has a price-to-book (P/B) multiple of 1.6 and a PEG ratio of 0.28. Full Analysis ChipMOS Technologies Ltd. is a leading independent provider of total semiconductor testing and packaging solutions to fabless companies, integrated device manufacturers (IDM) and foundries. IMOS exceeded analysts' earnings expectations in the past two quarters by an average margin of 27.0%. Earnings per share are projected to grow by an impressive 25.0% over the next 3-5 years. On May 3, 2006, IMOS reported earnings per share of 27 cents, which topped the Street's estimate by 22.7% and more than tripled its profits in the first quarter of 2005. The company posted earnings of eight cents per share in the prior-year period. Revenues amounted to NT$4,367.1 million or US$134.5 million, an increase of 30.8% from NT$3,339.5 million or US$102.9 million achieved in the same period in 2005. The company stated that its solid results were primarily driven by strong demand for its DDR (double data rate) II DRAM (dynamic random access memory) and flash businesses. The consensus earnings estimate for the second quarter of 2006 currently resides at 25 cents per share. This equates to a 25.0% jump when compared to the consensus of 60 days ago. As far as next quarter, analysts have upped their estimates by 7.1%. Profit forecasts for the full years of 2006 and 2007 have increased 17.0% and 27.0%, respectively, over the same time period. Looking ahead, IMOS expects higher growth for its LCD business in the second half of the year compared to the first half. Furthermore, it also expects its DDR II business to be a major contributor to revenue growth this year. The company is projecting revenue for the second quarter of 2006 will be between approximately US$137 million and US$143 million. IMOS's return on equity doubles that of the industry average—14% compared to 7%. The company has a price-to-book (P/B) multiple of only 1.6. The market's P/B multiple, represented by the S&P 500, currently stands at 4.4. Moreover, the stock trades at a valuation of 11.2x trailing 12-month earnings and at 7.1x its current fiscal-year estimated earnings. The market is trading at a valuation of 17.3x trailing 12-month earnings and at 16.2x its current fiscal-year estimated earnings. The company has a PEG ratio of 0.28. Note: The Zacks Rank is a very sensitive indicator that can change frequently for an individual stock. The ranks are updated every Monday morning on Zacks.com. As such, it is prudent to check the site for the latest Zacks Rank on the stocks highlighted in this section. Simply click the link for the stock or enter the symbol in the ticker entry box in the upper left hand corner of the web site. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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(SUR) - eighth straight positive earnings surprise

CNA SURETY (SUR) Background CNA Surety Corporation is the largest publicly traded surety company in the country. Through its principal subsidiaries, Western Surety Company and Universal Surety of America, CNA Surety provides surety and fidelity bonds in all 50 states through a combined network of approximately 35,000 independent agencies. Full Analysis SUR reported earnings for the first quarter 2006 on May 1 at 41 cents per share. That was up 24% from last year's 33 cents and above the consensus estimate of 38 cents. This represented SUR's eighth straight positive earnings surprise. Sales were up 8.3% to $101 million and income was reported at $18 million versus last year's loss of $11.9 million. SUR first exceeded its old 2002 highs of $16.60 on Jan 26, 2006 with a close at $16.70. But that breakout was suspect since it was not confirmed by noticeably heavy volume. Indeed the market could not sustain the rally and did not challenge the 2002 highs again for another month, with a $16.97 close on Feb 24. While this breakout was also on light volume, in the days following new highs were accompanied by significantly heavier volume. Now SUR set a six year high close on Monday with volume more than twice normal. The stock has no overhead resistance and good support at the old highs of $16.63. The Momentum trader can clearly see a company with good prospects (eight straight positive earnings surprises) being recognized by the market (new six year highs). Still it's rare to find such an opportunity with such strong support only a few points below the current market. What makes the old highs at $16.63 such strong support is the nearly three months that SUR spent pivoting around that level. Simply put, the more time the stock spent at or near the old highs, the stronger support at that level can be expected. Note: The Zacks Rank is a very sensitive indicator that can change frequently for an individual stock. The ranks are updated every Monday morning on Zacks.com. As such, it is prudent to check the site for the latest Zacks Rank on the stocks highlighted in this section. Simply click the link for the stock or enter the symbol in the ticker entry box in the upper left hand corner of the web site. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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(FCL) - exceeded forecasts for the past five quarters by an average margin of 78%

Foundation Coal Holdings, Inc. (FCL) has a history of smashing earnings estimates. The company has exceeded forecasts for the past five quarters by an average margin of 78%. Six analysts have raised their numbers for 2006 and 2007. Over the past 60 days, 2006 estimates have increased 10.4% to $2.23 per share. Also, 2007 estimates have risen 8.6% over the same time period. Full Analysis Foundation Coal Holdings, Inc., through its subsidiaries, engages in extracting, cleaning and selling coal to electric utilities, steel companies, coal brokers and industrial users primarily in the United States. It offers steam coal and metallurgical coal. The company operates a diverse group of 13 mines located in the Powder River Basin, Northern Appalachia, Central Appalachia and the Illinois Basin in the United States. Foundation Coal Holdings also involves in marketing coal produced by others to supplement its production. As of Dec 31, 2005, it had approximately 1.7 billion tons of proven and probable coal reserves, as well as operated nine mining complexes. On April 26, FCL said its first-quarter profit rose 66% and beat Wall Street expectations, as volumes and prices increased. Net income rose to $31.3 million, or 67 cents per share, from $18.9 million, or 41 cents per share, resulting from higher coal sales revenues and a lower income tax rate. Analysts had expected 50 cents per share. First-quarter coal sales revenues increased 29% to $387.6 million, as shipments increased 7% and average per ton sales realizations increased 20%. The company proceeded to raise guidance for 2006. FCL upped its expectations for 2006 earnings per share to between $2.00 and $2.60, from its previous guidance of $1.50 to $2.15. Foundation has a history of smashing earnings estimates. The company has exceeded forecasts for the past five quarters by an average margin of 78%. Six analysts have raised their numbers for 2006 and 2007. Over the past 60 days, 2006 estimates have increased 10.4% to $2.23 per share. Also, 2007 estimated have risen 8.6% over the same time period. Despite a strong rally, the stock is attractively valued at 17.0x next year's estimates of $3.29 per share, well below the long-term growth rate of 28.33%, giving the stock a PEG ratio of 0.60. FCL also sports a return on equity of 32%, above the industry average of 24%. Note: The Zacks Rank is a very sensitive indicator that can change frequently for an individual stock. The ranks are updated every Monday morning on Zacks.com. As such, it is prudent to check the site for the latest Zacks Rank on the stocks highlighted in this section. Simply click the link for the stock or enter the symbol in the ticker entry box in the upper left hand corner of the web site. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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(TRW) - topped earnings estimates in five consecutive quarters

TRW Automotive Holdings Corp. (TRW), a Zacks #1 Rank stock, topped the Street's earnings estimate in five consecutive quarters. The company recently raised its full-year EPS guidance after a strong first quarter. Analysts' earnings estimates have been trending higher for this year and next. The company has a price-to-book (P/B) multiple of 2.3. Full Analysis TRW Automotive Holdings Corp. designs, manufactures and sells automotive systems, modules and components to automotive original equipment manufacturers and related after-markets primarily in the United States and Europe. The company operates in three segments: chassis systems, occupant safety systems and automotive components. TRW topped the Street's earnings estimate in five consecutive quarters. In the company's last nine quarters, it succeeded in beating analysts' estimates eight times while meeting only once. Earnings per share are forecasted to grow 11.6% over the next 3-5 years. On May 3, 2006, TRW blew away analysts' expectations when it posted earnings per share of $1.01 for the first quarter of 2006 (this excludes $57 million in expenses for redeeming bonds of its Lucas Industries Ltd. subsidiary). With the Street calling for 59 cents per share, the company surprised to the upside by 71.2%. Revenues came in at $3.4 billion, compared to $3.2 billion in the first quarter of 2005. The rise in revenues can be attributed to sales from the acquisition of Dalphi Metal Espana, S.A., which was acquired in October 2005, coupled with sales growth from safety products and the net benefit of higher vehicle production, primarily in Europe. Due to its strong first-quarter results, TRW raised its full-year 2006 earnings per share guidance. The company now projects earnings per share between $1.30 and $1.60, which includes a $57 million charge related to the bond tender transaction. Excluding this charge, EPS are forecasted to be between $1.85 and $2.15. The consensus earnings estimate for 2006 currently sits at $2.14. This represents a 23.7% jump when compared to the consensus of just seven days ago. Two analysts covering the stock submitted upward revisions. Looking at profit forecasts for 2007, two analysts also raised their estimates, with the consensus currently residing at $2.30. This represents a 13.9% increase over the past week. When TRW's level of profitability, measured by return on equity, is compared with that of the industry average, the company has done considerably better. TRW's return on equity is 19%, compared to 14% for the industry. The company has a price-to-book (P/B) multiple of 2.3. The market's P/B multiple, represented by the S&P 500, currently stands at 4.4. The stock trades at a valuation of 12.2x trailing 12-month earnings and at 12.8x its current fiscal-year estimated earnings. The market is trading at a valuation of 17.3x trailing 12-month earnings and at 16.2x its current fiscal-year estimated earnings. Note: The Zacks Rank is a very sensitive indicator that can change frequently for an individual stock. The ranks are updated every Monday morning on Zacks.com. As such, it is prudent to check the site for the latest Zacks Rank on the stocks highlighted in this section. Simply click the link for the stock or enter the symbol in the ticker entry box in the upper left hand corner of the web site. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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Alcan Inc. (AL) - record first-quarter earnings

Alcan Inc. (AL) recently announced record first-quarter earnings. Earnings per share grew 13.4% over the past five years and are projected to grow 10.0% over the next 3-5 years. This Zacks #1 Rank stock is currently reviewing a half dozen expansionary projects due to increasing aluminum prices. AL has a current dividend yield of 1.1% and a five-year average dividend yield of 1.7%. Full Analysis Alcan Inc. engages primarily in bauxite mining and alumina refining activities mainly in the United States, Europe and Asia Pacific. The company operates in four business groups: bauxite and alumina, primary metal, engineered products and packaging. AL is the world's second-largest producer of primary aluminum. It is also ranked number one worldwide in food flexible, pharmaceutical and cosmetics packaging and number two in tobacco packaging. AL topped analysts' earnings expectations in three out of the past four quarters by an average margin of 16.0%. Earnings per share grew 13.4% over the past five years and are forecasted to grow 10.0% over the next 3-5 years. On May 2, 2006, AL surprised to the upside when it announced first-quarter 2006 profits of $1.21 per share—the highest in the company's history. With earnings per share of 56 cents in the first quarter of 2005, AL surged by an eye-popping 116.1%. High aluminum prices and excellent operating performances across most of AL's businesses helped fuel its impressive first quarter. Revenues were up $372 million to $5.55 billion, compared to the year-ago quarter. Analysts' earnings estimates have been trending higher for AL. Profits forecasts for this quarter and next quarter soared 50.0% and 72.5%, respectively, over the past 90 days. The consensus earnings estimates for this year and next year are up 36.8% and 34.3%, respectively, over the same time period. On Apr 27, 2006, the Board of Directors at AL declared a quarterly dividend of 15 cents per common share of stock. The dividend is payable on Jun 20, 2006, to shareholders of record at the close of business on May 19, 2006. The company is currently yielding 1.1% and has a five-year average dividend yield of 1.7%. AL is evaluating a half dozen expansion projects pertaining to its aluminum production capacity. At the company's annual meeting, AL stated it is considering projects in Canada, Cameroon, China and Iceland. With aluminum prices at an 18-year high, they forced the company to consider such expansionary plans. Note: The Zacks Rank is a very sensitive indicator that can change frequently for an individual stock. The ranks are updated every Monday morning on Zacks.com. As such, it is prudent to check the site for the latest Zacks Rank on the stocks highlighted in this section. Simply click the link for the stock or enter the symbol in the ticker entry box in the upper left hand corner of the web site. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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Zoll Medical Corp. (ZOLL) - exceeded earnings estimates for three straight quarters by an average margin of 23%

ZOLL Medical Corporation's (ZOLL) orders in the North American hospital and pre-hospital markets continue to grow. ZOLL has exceeded earnings estimates for three straight quarters by an average margin of 23%. Two analysts raised their numbers for 2006. This year's estimates have risen 3.8% over the past 30 days to 83 cents per share. The stock is attractively valued at 25.5x next year's estimates of $1.11 per share, well below the long-term growth rate of 40%, giving the stock a PEG ratio of 0.64. Full Analysis ZOLL Medical Corporation designs, manufactures, and markets noninvasive cardiac resuscitation solutions. These solutions include pacing and defibrillation devices, such as ZOLL's M Series, new E Series, AED Plus, AED Pro, and LIFECOR, Inc.'s LifeVest Wearable Defibrillator. In addition, these solutions include circulatory assist devices, such as Advanced Circulatory Systems, Inc.'s ResQPOD Circulatory Enhancer and AutoPulse. These devices help healthcare professionals, emergency medical service providers, and first responders to diagnose and treat cardiac arrest, wherever it occurs. Through its subsidiary, ZOLL Data Systems, ZOLL also designs and markets software that automates the collection, and the management of both clinical and non-clinical data. ZOLL has operations in the United States, Canada, the United Kingdom, Germany, France, the Netherlands, and Australia, with business partners in all of the world's major markets. The company should generate improved earnings growth starting in the current fiscal year. This path to profitability is driven by several factors. Although sales have been erratic, orders in the North American hospital and pre-hospital markets continue to grow. The growth in these orders sets the stage for revenue growth in 2006. Management anticipates North American hospital revenue to grow in the high single digits and North American pre-hospital revenue to grow roughly 20%. After making personnel changes and investments over the last few years, management expects international sales to grow in the mid-teens in 2006. To help overcome the weak earnings growth in the near-term, ZOLL implemented cost cutting initiatives in the fiscal second quarter 2005. ZOLL has been realizing the full benefits of these cost reductions since the fiscal third quarter 2005. ZOLL has exceeded earnings estimates for three straight quarters by an average margin of 23%. Two different analysts raised their numbers for 2006. This year's estimates have risen 3.8% over the past 30 days to 83 cents per share. The stock is attractively valued at 25.5x next year's estimates of $1.11 per share, well below the long-term growth rate of 40%, giving the stock a PEG ratio of 0.64. Note: The Zacks Rank is a very sensitive indicator that can change frequently for an individual stock. The ranks are updated every Monday morning on Zacks.com. As such, it is prudent to check the site for the latest Zacks Rank on the stocks highlighted in this section. Simply click the link for the stock or enter the symbol in the ticker entry box in the upper left hand corner of the web site. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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Inco Ltd (N) - nine straight quarters of positive earnings surprises before the March results

Inco Ltd (N), a Zacks #1 Rank Stock, explodes to the upside. Background Inco Limited is one of the world's premier mining and metals companies, and the world's second-largest producer of nickel. Their world-class mineral reserve and resource base is among the best in the global nickel industry. They are also an important producer of copper, cobalt and precious and platinum-group metals and a major producer of specialty nickel-based products. Full Analysis Bolstered by gold prices exceeding $700/ounce and a $15.35 billion takeover bid by Teck Cominco, N gapped to new highs on Monday. The company last reported earnings on Apr 20, and just missed estimates with EPS of 90 cents for the March 2006 quarter, compared to analysts' expectations of 92 cents. This narrow miss is somewhat offset by the company's track record of nine straight quarters of positive earnings surprises before the March results. Gold is trading at more than quarter-century highs. In the process, higher gold prices are positively impacting all mining stocks and N is no exception. What makes N's explosion on Monday so convincing is the extraordinary volume accompanying the gap higher. Here's a market setting at least twelve-year highs on very nearly record volume. Obviously a strong, strong move. N is a prime example of the Momentum principle of ‘Buy High, Sell Higher'. This is a stock with very strong momentum right now, and while it may pull back for a few days after Monday's strong move, it is unlikely to reverse direction anytime soon. A key element here to watch is the gap made between Friday's high and Monday's low ($59.50 and $64.42). Any correction after the gap higher should not reach as low as $59.50 for the move to still be valid. But a close above the 52-week highs of $70.60 after a mild pull-back? That would confirm a very strong stock still poised for higher moves yet. Note: The Zacks Rank is a very sensitive indicator that can change frequently for an individual stock. The ranks are updated every Monday morning on Zacks.com. As such, it is prudent to check the site for the latest Zacks Rank on the stocks highlighted in this section. Simply click the link for the stock or enter the symbol in the ticker entry box in the upper left hand corner of the web site. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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Arch Coal, Inc.'s (ACI) - most recent quarter a 41.67% earnings surprise

Arch Coal, Inc.'s (ACI) dominant position in the low-sulfur coal market is its key asset. The company has met or exceeded earnings estimates in five out of the past six quarters, with the most recent quarter being a 41.67% surprise. Five different analysts have raised their numbers for 2006 and 2007. Estimates for 2007 have increased 11.1% over the past 90 days due to strong demand. Full Analysis Arch Coal, Inc. (ACI) is one of the largest coal producers in the U.S. The company is involved in the mining, processing, and marketing of low-sulfur coal from 25 mines in the eastern and western parts of the country. The company's mines are located so it can ship coal cost effectively to major domestic coal-fired electric generation facilities. As of the end of 2005, Arch Coal controlled reserves of approximately 2.8 billion tons. Approximately 98% of the reserves consist of metallurgical coal, which is the coal variety used in steam boilers to generate electricity. Its eastern operations accounted for approximately 54% of its revenue during the year, even though roughly 78% of the company's tonnage came from the western part of the U.S. It sells all of its coal to producers of electric power. Arch Coal's dominant position in the low-sulfur coal market is its key asset. Coal fundamentals appear to be strengthening due to the recovering economy and favorable developments in competing fuels such as natural gas. Management noted that demand for coal remains strong in both the eastern and the western regions. Coal stockpiles at power utilities, an important indicator of demand, are rapidly declining, reflecting high consumption rates. Global coal demand is also portraying similar trends, underpinned by increasing consumption in fast-growing economies such as China. Coal prices are also increasing in response to the burgeoning demand. During 2005, the average realized sale price rose 14.5% year-over-year to $18.04/ton vs. $15.75/ton. Spot prices for several coal products also rose to their highest levels in years. The company has met or exceeded earnings estimates in five out of the past six quarters, with the most recent quarter being a 41.67% surprise. Five different analysts have raised their numbers for 2006 and 2007. Estimates for 2007 have increased 11.1% over the past 90 days due to strong demand. Despite a strong run, the stock is attractively valued at 14.7x next year's estimates of $7.21 per share, well below the long-term growth rate of 29%, giving the stock a PEG ratio of 0.51. Note: The Zacks Rank is a very sensitive indicator that can change frequently for an individual stock. The ranks are updated every Monday morning on Zacks.com. As such, it is prudent to check the site for the latest Zacks Rank on the stocks highlighted in this section. Simply click the link for the stock or enter the symbol in the ticker entry box in the upper left hand corner of the web site. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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United Technologies Corporation (UTX) - approved an increase in the company's quarterly cash dividend

United Technologies Corporation (UTX) beat the Street's earnings estimate in 16 consecutive quarters, most recently by 5.6%. Due to its strong start to the year, the company raised its full-year 2006 earnings per share guidance. The company increased profits for the past nine years. The Board of Directors recently approved an increase in the company's quarterly cash dividend. UTX has a current dividend yield of 1.4% and a five-year average dividend yield of 1.5%. Full Analysis United Technologies Corporation provides an array of high technology products and services to the building systems and aerospace industries. UTX conducts its business through six principal segments: Otis, Carrier, UTC Fire & Security, Pratt & Whitney, Hamilton Sundstrand and Sikorsky. The company caters to a diverse clientele spread over the U.S., Europe, Asia/Pacific and other regions. UTX has a strong history of exceeding analysts' earnings expectations, having done so for an impressive 16 straight quarters. Earnings per share grew 10.9% over the past five years and are projected to grow by a slightly higher margin going forward—11.6% over the next 3-5 years. On Apr 19, 2006, UTX announced first-quarter 2006 profits of 76 cents per share. With analysts expecting 72 cents per share, the company surprised to the upside by 5.6%. When compared to the first quarter of 2005, UTX's profits were up 10.1%. Revenues grew 12.8% to $10.6 billion. The company increased revenues and expanded gross margins for the past six years. Furthermore, UTX grew profits for nine years running. Due to its great start to 2006, UTX now projects earnings per share between $3.50 and $3.60 for the full year. The company previously forecasted earnings between $3.40 and $3.55 per share. Based on its organic growth in the first quarter (9%), coupled with current backlogs, revenues for the year are expected to be around $46 billion. Analysts covering the stock have become increasingly optimistic about its future prospects. Upward revisions for this year have been submitted by 10 analysts, while seven analysts followed the same action for next year. On Apr 12, 2006, the Board of Directors at UTX increased its quarterly dividend 20% to 26.5 cents per share. The company more than doubled its dividend during the past three years. Moreover, UTX paid cash dividends on its common stock for 70 consecutive years dating back to 1936. UTX has a current dividend yield of 1.4% and a five-year average dividend yield of 1.5%. The company' return on equity is higher than that of the industry average—19% compared to 16%. UTX is a Zacks #2 Rank (Buy) stock. Zacks #2 Rank stocks have generated an average annual return of 22.0% since 1988. Because the Zacks Rank has a market cap bias, Growth & Income investors may find a greater number of large-cap stocks by considering both Zacks #1 Rank (Strong Buy) and Zacks #2 Rank (Buy) stocks in their selection criteria. Note: The Zacks Rank is a very sensitive indicator that can change frequently for an individual stock. The ranks are updated every Monday morning on Zacks.com. As such, it is prudent to check the site for the latest Zacks Rank on the stocks highlighted in this section. Simply click the link for the stock or enter the symbol in the ticker entry box in the upper left hand corner of the web site. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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Snap-on Incorporated (SNA) - beat analysts in seven straight quarters by an average margin of 18.6%

Snap-on Incorporated (SNA), a Zacks #1 Rank stock, topped the Street's earnings estimate in seven straight quarters by an average margin of 18.6%. Analysts' earnings estimates have been trending higher. SNA has a current dividend yield of 2.6% and a five-year average dividend yield of 3.2%. The company has a price-to-book (P/B) multiple of 2.6. Full Analysis Snap-on Incorporated engages in the innovation, manufacture and marketing of tool, diagnostic, service and equipment solutions for professional tool and equipment users under various brands and trade names. The company also generates income from various financing programs to facilitate the sales of its products. SNA exceeded analysts' earnings expectations in seven consecutive quarters by an average margin of 18.6%. Earnings per share are projected to grow 11.7% over the next 3-5 years. On Apr 28, 2006, SNA reported profits of $22.1 million, or 37 cents per share, in the first quarter of 2006. The company's earnings beat analysts' estimates by an impressive 32.1% and were up 19.4% when compared to the prior-year period. Revenues were down less than 1% to $593.5 million due mainly to unfavorable foreign currency exchange rates. The company said its profit improvement reflects cost reductions, including the purchase of materials from lower-cost regions, combined with sales of products with a higher profit margin and improved pricing. For the remainder of the year, SNA will continue to implement its 2006 strategic priorities. These encompass focused innovation of its product and process improvements, growth initiatives in emerging markets and its actions to further enhance value and service to Snap-on's franchisees and customers. The consensus earnings estimate for this quarter currently sits at 47 cents. When compared to the consensus of 30 days ago, it has risen 9.3%. Three analysts covering the stock submitted upward revisions for this quarter. Profits forecasts for this year and next year jumped 8.1% and 5.9%, respectively, over the same time period. Four analysts revised their estimates upward for this year, while three followed suit for next year. On Apr 27, 2006, the Board of Directors at SNA approved a second-quarter dividend of 27 cents per share. The dividend is payable Jun 9, 2006, to shareholders of record on May 19, 2006. The company paid consecutive quarterly cash dividends, without interruption or reduction, since 1939. Needless to say, this is extremely impressive. SNA is currently yielding 2.6% and has a five-year average dividend yield 3.2%. The company has a price-to-book (P/B) multiple of 2.6. The market's P/B multiple, represented by the S&P 500, currently stands at 4.4. Note: The Zacks Rank is a very sensitive indicator that can change frequently for an individual stock. The ranks are updated every Monday morning on Zacks.com. As such, it is prudent to check the site for the latest Zacks Rank on the stocks highlighted in this section. Simply click the link for the stock or enter the symbol in the ticker entry box in the upper left hand corner of the web site. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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Regal Beloit (RBC) - earnings up 76% - 9% suprise over expectations

REGAL BELOIT (RBC), a Zacks #1 Rank Stock, set new highs after increasing first quarter results by 76% from last year. Background REGAL-BELOIT CORP. manufactures a diverse line of power transmission products and expendable, high-speed steel, rotary cutting tools. The company's power transmission products, manufactured by its Power Transmission Group, include standard and custom gearboxes, specialized off-highway transmissions, rigid forklift axles, custom gearing, hi-performance transmissions and ring-and-pinion gear sets, manual valve actuators and fractional horsepower gearmotors. Rotary cutting tool products are manufactured by its Cutting Tool Group. Full Analysis On May 1, RBC reported earnings for the March 2006 quarter at 72 cents per share, up 76% from last year and a positive 9% surprise over analysts' consensus expectations. Sales grew 8% to $398 million and income rose 29% to $24 million. It is interesting to note that with the results of the quarter, RBC has not disappointed in the last 10 straight quarters. RBC gapped higher on release of the news, but closed at the low of the session on May 1. In the days afterward, RBC set at least 12-year highs on heavy volume. The attached chart below makes obvious the pick up in volume that RBC is experiencing. RBC's current uptrend began on May 13, 2005 when a two-month correction ended with a low of $25.30. Since that time, RBC has more than doubled in price. This trend shows no sign of letting up. Momentum investing is all about finding stocks with improving fundamentals as it is being recognized by the market. When you find a stock, like RBC, taking out the old highs, confirmed by a positive earnings surprise and setting new historic highs on heavy trading volume, it just doesn't get much clearer than that. This is a stock whose technical action clearly shows that the market as a whole is recognizing the significant managerial improvement being made at RBC. Note: The Zacks Rank is a very sensitive indicator that can change frequently for an individual stock. The ranks are updated every Monday morning on Zacks.com. As such, it is prudent to check the site for the latest Zacks Rank on the stocks highlighted in this section. Simply click the link for the stock or enter the symbol in the ticker entry box in the upper left hand corner of the web site. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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(VPHM) - ViroPharma, Inc - at $9, upgrading to buy, target $16

Current Recommendation: Buy Prior Recommendation: Hold Date of Last Change: 05/04/2006 Current Price (05/04/06): $9.05 Six- Month Target Price: $16.00 Outlook ViroPharma, Inc. is a pharmaceutical company engaged in the development and commercialization of products that address diseases caused by infectious agents such as a virus or pathogenic bacteria. The company has one approved product, Vancocin Capsules, for the treatment of antibiotic-associated infection, and two mid-stage candidates for viral infections. The stock has been extremely volatile over the past few months. The stock went from over-hyped to under-valued in the course of a few months all based on issues surrounding Vancocin. Our price target is $16 per share. KEY POINTS The near-term future of ViroPharma is heavily dependant on sales of Vancocin Capsules. Inventory draw-down significantly impacted reported sales in the first quarter despite the fact that prescription demand remains very strong. We think the inventory situation is now normal, and Vancocin sales should rebound in the second quarter. Generic manufacturer Akorn and India's Cipla Pharmaceutical announced in November 2005 they would seek approval for a generic version of an oral, hospital-based, antibiotic with sales of approximately $100 million. We believe this product to be ViroPharma's Vancocin. Gaining approval for generic Vancocin will be difficult given the manufacturing challenges, but the risk still exists. Generic Vancocin, perhaps in 2009, could reduce sales in that year by 50%. Given the change in apparent guidelines by the Office of Generic Drugs (OGD), the risk of generic Vancocin caused a 45% sell-off in the stock in March 2006. The company plans to petition the OGD with a formal letter in the second quarter. We believe that ViroPharma's position is strong, and the risk of a generic product before 2009 is highly unlikely. The company recently presented very impressive phase II data on CMV candidate Maribavir. Based on these data, we have added Maribavir to our long-term model and now assume $25 million in sales in 2009. This raised EPS by $0.17 for 2009 and increased our long-term growth projection from 2% to 7%. We currently do not model contribution from other mid-stage candidate such as HCV-796 or Pleconaril before 2009. The company plans to in-license or acquire one or two candidates in 2006. This also offers opportunity not currently modeled. ViroPharma's stock defines the term volatile. The stock was up over 1,100% from below $2 to above $22 from March 2005 to early March 2006. Then, in mid March 2006, with the announcement from the OGD, the stock dropped 45%. We had a Sell rating on ViroPharma when the announcement occurred, but quickly went to a Hold rating at $12. The shortfall in Vancocin first quarter sales due to inventory issues caused yet another 20% drop in early May. Now, at $9 we are upgrading the name to Buy. Our target, throughout all these events, has remained $16. OVERVIEW ViroPharma, Inc. is a pharmaceutical company engaged in the development and commercialization of products that address serious diseases treated by physician specialists and in hospital settings. The company is focusing product development activities on viral and bacterial diseases, including cytomegalovirus (CMV) infections related to hematopoietic stem cell (bone marrow) transplantation, hepatitis C (HCV), and antibiotic associated diarrhea (AAD). The company's chief product, Vancocin Capsules, is the only U.S. Food and Drug Administration (FDA) approved product to treat colitis caused by either Staphylococcus aureus or Clostridium difficile. ViroPharma acquired the U.S. rights to this product from Eli Lilly in November 2004 for an upfront payment of $116 million and future royalty payments based on sales. Vancocin sales were approximately $126 million in 2005. ViroPharma is located in Exton, PA and currently employs roughly 36 professionals. The investment story at ViroPharma is currently about Vancocin Capsules (Pulvules), a potent oral antibiotic treatment for enterocolitis caused by Staphylococcus aureus or antibiotic-associated pseudomembranous colitis caused by Clostridium difficile. The product is the only FDA-approved drug to treat both gram-positive bacterial infections. Despite significant patient demand, sales in the first quarter 2006 were only $29.2 million – far below our $40 million estimate. We wrote in a previous research report that inventory levels at year-end 2005 were potentially two weeks above normal and the first quarter could experience some destocking. This was our primary reason for not recommending the stock at $12 when our price target remained $16. As it turns out, our two week estimate was way low. Management estimates that three to four weeks of inventory draw-down occurred in the first quarter. We calculate this resulted in roughly $12 million in lost Vancocin sales. Adding this $12 million back to the $29.2 million reports sales yields a figure right in-line with the IMS prescription data at $41-42 million. ViroPharma management significantly underestimated the amount of Vancocin inventory in the channel when they purchased the product from Eli Lilly in November 2004. Conversely, it seems as though revenue per script, or the number of Vancocin packs per prescription, was over-estimated by management during 2005. Yet, that being said, inventory levels returned to normal by the middle of April and wholesaler buying patterns should track IMS figures going forward. Although management credibility took a hit, Vancocin sales should rebound. The guidance for 2006 is for sales between $160 and $170 million. Our figure of $165.7 million is right in-line with guidance. The company believes that severity of the C. difficile infection is increasing. C. difficile usually does not affect healthy individuals. However, under certain circumstances, usually after or during antibiotic therapy, the bacteria can colonize in the lower gastrointestinal tract where it may produce toxins (toxin A and B) that cause inflammation and diarrhea. Hospitalized patients, particularly those who have received broad-spectrum antibiotics, are at greater risk of acquiring diseases related to C. difficile infection. This type of infection, spread from patient-to-patient within the hospital setting (known as a nosocomial infection), has become a serious issue according to the Center for Disease Control (CDC). The company has initiated several educational campaigns and plans to spend approximately $3 million on education and training for Vancocin Capsules. ViroPharma recently licensed the rights to develop a non-toxigenic strain of C. difficile from Dr. Dale Gerding at the Hines VA Hospital. The company will seek to use these non-toxigenic spores to colonize post-Vancocin treated patients, thus replacing toxigenic C. difficile in the GI track. ViroPharma plans to enter clinical testing perhaps in 2007. We think the earliest this follow-on therapy could come to market is 2010 given concerns by the FDA on "infecting" patients with C. difficile – even though it is nontoxigenic. We do not model any contribution from this follow-on therapy, so positive clinical work could present upside to our long-term model. In 2003, ViroPharma acquired the worldwide rights (ex-Japan) to a potent and selective, oral inhibitor of cytomegalovirus (CMV) from GlaxoSmithKline called Maribavir. CMV is a member of the herpes virus group, which includes the viruses that causes chicken pox, mononucleosis, herpes labialis (cold sores) and herpes genitalis (genital herpes). CMV can cause serious complications in persons with weakened immune systems and has the ability to remain dormant in the body for long periods of time. Human CMV infection rates average between 50% and 85% of adults in the U.S. by 40 years of age. In most healthy individuals, CMV infection causes little to no apparent illness. However, in immuno-compromised individuals CMV can lead to serious disease or death. Unlike currently available anti-CMV agents that inhibit CMV DNA polymerase, Maribavir inhibits viral DNA assembly and inhibits egress of viral capsids from the nucleus of infected cells. ViroPharma recently presented very positive results from a 12-week (n=111) phase II study with Maribavir used as a prophylaxis treatment in CMV-seropositive patients with allogenic bone marrow ("stem cell") transplant. The data demonstrated that Maribavir offers a significant reduction (p<0.05) in CMV re-activation on an intent-to-treat basis. Maribavir patients dosed twice daily (BID) with either 100mg or 400mg reported on 15% re-activation rate versus placebo at 57%. Additionally, no patients on Maribavir (n=83) reported CMV disease versus 11% (n=3 of 28) on placebo. We are very impressed with these data. Skin rash was similar between Maribavir and placebo and no serious adverse events to inhibit future testing were observed. Maribavir looks well-tolerated with efficacy superior to ganciclovir. This data will be presented fully at an upcoming medical conference. ViroPharma is now meeting with the FDA to discuss plans for two different phase III trials – one in allogenic stem cell transplant to start mid-2006 and another in solid organ transplant to start late-2006. These trials will form the basis for a New Drug Application (NDA) in 2008, leading to a launch in 2009. Another development program worth noting is an oral polymerase inhibitor molecule, HCV-796, for the treatment of hepatitis C virus infection. HCV-796 is a follow-on molecule to a previously studied molecule, HCV-086. ViroPharma and its development partner, Wyeth Pharmaceuticals, conducted phase I trials of HCV-086 in early 2004. The companies decided that HCV-796 may prove to be more effective than HCV-086 and have now re-focused research efforts on this compound. Wyeth and ViroPharma initiated a phase Ia single dose study in February 2005. The preliminary results from this study suggest that HCV-796 was well tolerated in patients suffering from HCV and that it had a favorable pharmacokinetic profile. In May 2005, the duo initiated another phase Ib multiple dose trial designed to access antiviral activity, safety, and pharmacokinetic profile of HCV-796 in 96 patients dosed for a period of 14 days. Preliminary results demonstrated antiviral effects in adult patients with chronic hepatitis C infection. The patient cohort with the highest exposure to HCV-796 achieved a peak mean HCV viral load reduction of 1.4 log10, or 96%, on day four of a 14 day dosing period. HCV-796 was found to be generally well tolerated, with favorable pharmacokinetics and no dose-limiting toxicities. Additional data is expected in the second quarter this year at Digestive Disease Week (DDW) in May. One final product worth noting is the Pleconaril, currently in phase II clinical trials at Schering-Plough. The product candidate is an oral anti-picornavirus treatment for the common cold. Pleconaril has the potential to reduce the time and symptoms of rhinovirus and enterovirus infections. Schering-Plough may enter phase III trials with this candidate in 2006. ViroPharma will receive milestone payments upon commercialization and royalties on product sales. This candidate is high risk, but could begin to contribute to the top-line at ViroPharma in 2008. This would present upside to our earnings model. INVESMTMENT OUTLOOK In the area of C. difficile infection, several companies are working on therapies that may compete with Vancocin in the C. difficile associated diarrhea (CDAD) market. Two companies, Oscient Pharmaceuticals and Par Pharmaceuticals are working on antibiotic drugs in phase II trials for C. difficile infection. Oscient's ramoplanin should enter phase III in 2006. Ramoplanin is a macrocyclic depsipeptide compound that disrupts bacterial cell wall construction by inhibiting glycosyltransferase. A head-to-head comparison on ramoplanin versus vancomycin done by the Department of Microbiology at the University of Leeds demonstrated that both compounds had similar efficacy to reduce cytotoxin production with rapid onset of action. However, ramoplanin patients demonstrated significantly less C. difficile spore recovery. We believe that if ramoplanin offers less or no acquired resistance, hospitals will quickly convert to the newer mechanism drug. Par Pharma presented positive data on PAR-101 in CDAD at the ICAAC meeting in December 2005 that looked very encouraging. Finally, small-biotech Acambis is working on an injectable vaccine for C. difficile currently in phase I trials. Perhaps the biggest concern – and the reason the stock dropped by almost 50% in March 2006 – is the potential for a generic alternative. Akorn announced in November 2005 it would seek approval for a generic version of an oral, hospital-based, antibiotic with sales of approximately $100 million. Akorn has teamed up with India's Cipla Pharmaceuticals on manufacturing for the potential product. We believe this product to be Vancocin. On March 17, 2006 the Office of Generic Drugs stated it would entertain the idea of streamlining the filing process for a generic Vancocin. The change would allow for in-vitro (testtube) bioequivalencey testing instead of the previously required human testing. The apparent change in the standard removes a costly clinical trial that could have taken two years to complete. No ANDAs have yet been filed on Vancocin, but ViroPharma will formally petition the FDA with a detailed scientific argument in the second quarter. This letter will be made public once filed. We hope to have a better understanding of ViroPharma's defense plan at that time. However, we have long said that gaining approval for generic Vancocin will be difficult given the manufacturing challenges. We had previously believed even if Cipla start today, they would not gain approval until late 2008 based on the manufacturing validation necessary to product a Vancocin tablet. It took ViroPharma over a year to get validation from the third party manufacturer in the first quarter. Our long-term model assumes no generic Vancocin until 2010. We are concerned about this generic risk but also remind investors that ViroPharma could be a dramatically different looking company in 2010 if pipeline candidates such as Maribavir, HCV-796, or Pleconaril succeed. We expect ViroPharma to seek to in-license one or two more products during 2006. Based on the recent very positive phase II Maribavir data, this candidate may be the driving force of the future. Peak sales estimates for Maribavir could quadruple that of Vancocin. And, despite generic risk and emerging competition, Vancocin Capsules will probably remain the industry standard for at least the next 18 months. Management guidance for 2006 seems conservative given the lack of immediate competition for the drug and another expected price increase this fall. INDUSTRY POSITION ViroPharma is one of the few profitable biotechnology companies in the small cap sector with only one product in the market. It has posted five (soon to be six) consecutive quarters of profitability since the acquisition of Vancocin in November 2004. This is a great achievement for a company that posted negative earnings only a year ago. The year 2005 was its first full year of profitability. The company is now debt free with working capital of $179 million. On the first quarter conference call management discussed previous significant work in looking for product candidates to in-license or acquire. According to management, over 60 products have been analyzed since late 2005. Management's strict criteria have eliminated the large majority of these potential products. ViroPharma is looking for niche candidate in transplant rejection or a hospital setting anti-infectant in either already approved, or in late-stage (phase III) development. We expect to hear news on one or two potential deals in 2006. As with HCV-796 or Pleconaril, this could present upside to our financial model. INSIDER TRADING AND OWNERSHIP Institutional owners control 76% of the shares outstanding. The largest reported holders of Viropharma Incorporated shares as of the end of the quarter were: Baker Brothers Advisors, LLC., FMR Corporation, Legg Mason Inc., Waddell & Reed Financial, Next Century Growth Investors, T. Rowe Price Associates, American Express Financial Corp., Disciplined Growth Investors, and Aventis Pharmaceuticals; all of which hold over 2% of the total shares outstanding. Both Baker Brothers and FMR are reported to hold over 10% of the shares outstanding each. This 20% concentration is a great cause for concern. Should one of these companies look to exit the name there would be sizable selling pressure on the stock. Insiders control roughly 7% of the total shares outstanding. Over the past six months there has been limited insider activity. Courtesy: Zacks.com

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(IVAC) - ...expect guidance for the full year to increase

$40 Target for Intevac Posted Mon May 08, 01:31 pm ET by Steve Biggs, CFA Intevac, Inc. (IVAC) dominates the market for thin-film disk sputtering equipment. The transition to perpendicular recording and a shortage of media bode well for the company's next-generation 200 Lean thin-disk sputtering equipment. However, due to the strong first half of 2006, the company has lowered guidance for the second half of the year by default. We believe management is being conservative as the company has already booked enough orders to meet its 2006 guidance. We therefore expect guidance for the full year to increase and maintain a Buy rating on IVAC with a six-month target price of $40.00. IVAC, the leading supplier of thin-disk sputtering equipment, enjoys a strong presence in the data storage market. Its systems comprise half of the installed base of disk sputtering systems and produce an estimated half of all thin-film disks made throughout the world. The company is well-positioned to capitalize on the escalating demand for digital data storage worldwide, which continues to grow with use of more storage intensive computing applications involving multimedia content as well as the emerging use of HDD storage in non-conventional consumer electronics applications. As imaging equipment begins to generate revenue from sales in 2006, margins will continue to improve with significant revenue opportunities later in the decade. Moreover, we believe that there is upside to our estimates and managements guidance as it has already achieved the bookings necessary to meet the low-end of its guidance. The stock is trading at 23.4 times our 2006 EPS estimates of $1.10. We believe the stock will soon begin to trade on 2007 estimates and rollover our valuation target to a multiple of approximately 32x our estimate for EPS of $1.26. We therefore maintain a Buy rating and our six-month price target of $40. Courtesy: Zacks.com

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(TXU) - TXU Corp. Remains a Buy

TXU Corp. Remains a Buy Posted Mon May 08, 02:37 pm ET by Jon Kolb Successful completion of a two-year, three-phase restructuring program by TXU Corporation (TXU), currently engaged in the implementation of revised strategies targeting operating efficiencies, capital allocation, risk management, financial flexibility and shareholder returns collectively represent a bullish outlook for TXU and its shareholders. Significant projected earnings growth, a 7% share repurchase program, and a 47% dividend hike further add to the stock's attractiveness. Accordingly, we maintain our BUY recommendation on TXU common stock with a six-month target price of $65. Price appreciation to our near-term valuation target, combined with the $0.4125 quarterly dividend – which we deem to be sustainable and secure – represents annualized total return potential of 28.2%. Operationally, management has been rapidly divesting non-core assets to help reduce debt and increase the focus on core utility businesses. In-line with this strategy, the company has already raised nearly $6 billion from the sale of its telecom, natural gas, and its Australian utility subsidiary. Furthermore, the company has also divested the assets of TXU Fuel, its gas transportation subsidiary comprising nearly 1,900 miles of intra-state pipelines and a total system capacity of 1.3 Bcf/day, and sold its TXU Gas subsidiary to Atmos Energy. These divestitures reflect management's decision to exit from natural gas and foreign businesses, including the troubled European unit, and instead focus on the generation and sale of electricity within Texas. Our Buy recommendation on TXU is supported by the company's continuously improving fundamentals and very reasonable earnings-based valuation relative to comparable diversified energy industry utilities. We are encouraged by the company's completion of its restructuring program and immediate implementation of its extensive revised strategies. Furthermore, we believe strong operating and financial results and improving liquidity will continue to allow TXU shares to outperform. Courtesy: Zacks.com

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