CHICAGO, July 9, 2012 /PRNewswire/ -- Zacks Equity Research highlights The New York Times Company (NYSE: NYT) as the Bull of the Day and AK Steel Holding Corp. (NYSE: AKS) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Genomic Health (Nasdaq: GHDX), Myriad Genetics (Nasdaq: MYGN) and Cepheid (Nasdaq: CPHD).
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Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
The New York Times Company's (NYSE: NYT) first-quarter 2012 earnings of $0.08 per share beat the Zacks Consensus Estimate of $0.02, and increased from a break-even in the prior-year quarter. The quarter reflects favorable response to the digital subscription packages, rise in circulation revenue and cost containment efforts.
To mitigate the ongoing slump in the advertising market, the company is diversifying its business and adding new revenue streams. The company is also streamlining its cost structure, strengthening its balance sheet and restructuring its portfolio. The company is offloading assets that bear no direct relation with the core operations in order to re-focus on its core newspapers and pay more attention to its online activities.
The stock is trading at a discount based on forward earnings estimates. Consequently, we upgrade our recommendation on the stock to Outperform. Our target price of $8.75, 12.3X 2012 EPS, reflects this view.
We are downgrading our recommendation on AK Steel Holding Corp. (NYSE: AKS) to Underperform due to the challenging steel pricing environment. The company's first-quarter 2012 net loss of $0.11 per share matched the Zacks Consensus Estimate. Revenues dipped 4.6% year over year to $1,508.7 million, trailing the Zacks Consensus Estimate.
Moving ahead, the company expects to post a profit in the second quarter. We are concerned about its high cost structure, the challenging operating environment in overseas markets, softness in the construction market and weaker international electrical steel prices. We expect pricing pressure to weigh on the company's results moving ahead.
Our long-term Underperform recommendation on the stock indicates that we believe it will perform below the market. Our price target of $4.75 is based on 79.2x our fiscal 2012 earnings estimate.
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Genomic Health to Outperform
We recently upgraded Genomic Health (Nasdaq: GHDX) to 'Outperform' from 'Neutral' on the basis of robust growth in its Oncotype DX franchise, a trend that is expected to continue given the various strategic initiatives undertaken by the company.
These strategies aim at increasing acceptance of its flagship product, Oncotype DX test. Genomic we believe is well placed to make the most of the huge market potential. It has been observed that the Oncotype DX breast cancer test changed treatment decision in 37% of early-stage breast cancer patients, thereby resulting in hundreds of millions of dollars in healthcare savings.
Genomic Health also diversified its offering with the launch of the Oncotype DX DCIS Score at the end of 2011. Besides, we are encouraged by the progress made by the company on the reimbursement front. Adoption of the test is expected to improve with Medicare's decision to cover the Oncotype DX colon cancer test. Accordingly, we expect the growth momentum to remain on a steady keel.
We are also encouraged by the company's decision of setting up a wholly owned genetics subsidiary, InVitae Corporation, in March 2012. This decision involves $20 million of investment over the next two years, the impact of which has been considered in the financial outlook for 2012. We expect this business to be a long-term contributor to the growth profile given the huge market opportunity in DNA sequencing.
During the most recent quarter, the company established a strategic alliance with OncoMed Pharmaceuticals for biomarker research to accelerate the clinical development of novel antibody cancer therapeutics. Although setting up of the genetic subsidiary will involve substantial investment (that could result in a net loss in the second quarter), we expect the company to benefit from its focus on sequencing. Despite the tough competitive landscape with the presence of players such as Myriad Genetics (Nasdaq: MYGN) and Cepheid (Nasdaq: CPHD), we expect Genomic Health to grow over the long term.
Our recommendation is backed by a Zacks #1 Rank (Strong Buy) in the short term.
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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