Zacks Analyst Blog Highlights: Heritage-Crystal Clean, Inc., Primus Guaranty, Ltd., Cepheid, National Semiconductor Corp. and National-Oilwell Varco, Inc.

CHICAGO--(BUSINESS WIRE)--Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Heritage-Crystal Clean, Inc. (Nasdaq: HCCI), Primus Guaranty, Ltd. (NYSE: PRS), Cepheid (Nasdaq: CPHD), National Semiconductor Corp. (NYSE: NSM) and National-Oilwell Varco, Inc. (NYSE: NOV).

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Here are highlights from Thursday’s Analyst Blog:

Heritage-Crystal Clean Initiated

Heritage-Crystal Clean (Nasdaq: HCCI) is a leading industrial and hazardous waste services provider to the vehicle maintenance and manufacturing industries. We think Heritage's programs are attractive to small and medium-sized businesses seeking hazardous waste management and a minimal regulatory burden.

We are initiating coverage of HCCI shares with a Hold rating. Our target price is $14.00, or 25.5x our FY09 EPS estimate. Heritage-Crystal Clean shares are trading at 124x our FY08 EPS and 21x our FY09 EPS. The higher P/E multiple in 2008 reflects a lower earnings stream related to the costs incurred on going public.

Primus Guaranty Heavily Exposed

Headquartered in Bermuda, Primus Guaranty, Ltd. (NYSE: PRS) sells credit swaps as protection against the risk of default on investment grade obligations. In exchange for a fixed quarterly premium, PRS guarantees its customers a payment of an agreed amount in case the debt issuer counterparty defaults.

S&P recently placed the company's rating on CreditWatch with negative implications. The company will report increased losses in the coming quarters due to the defaults of single-name credit entities held in its portfolio.

Cepheid Diagnosed as Fair Value

Cepheid, Inc. (Nasdaq: CPHD) is a molecular diagnostics company that makes systems for genetic analysis. The Sunnyvale, California-based company announced FDA clearance for its Xpert MRSA/SA SSTI test and Xpert MRSA/SA BC test. Cepheid also announced California legislation that mandates MRSA surveillance and testing in hospitals.

At its current price of $13.83 per share, Cepheid is trading at 3.8x our 2009 revenue estimate of $214 million, which is at a discount to the group multiple of roughly 6.6x. At this stage, we believe most of the second quarter revenue and earnings shortfall and revised guidance for 2008 have been factored in the stock price. We believe CPHD is appropriately valued at roughly 4.2x 2009 revenue estimate. Our price target moves to $15.50.

National Semi Keeps Up Stride

National Semiconductor (NYSE: NSM) is an OEM [original equipment manufacturer] of analog and mixed signal integrated circuits. Forward revenue guidance is an increase of 1-3% in the next quarter. New higher-margin products continue to grow in the mix, and management has refocused R&D [research and development] into areas that should sustain margins.

Valuation remains attractive in our opinion. Consequently, we are reiterating our Buy rating on NSM shares. National Semiconductor has refocused its business on supplying higher margin analog ICs to some of the fastest growing markets, including wireless handsets, notebooks, networking, and flat panel displays. National is also a top provider of power management components and amplifiers.

Drillers, Baby, Drillers

The fact is that it is getting more and more difficult to find new sources of oil, and the existing sources are being depleted at an alarming rate. We are still getting close to peak world-wide oil production. Yes, Congress has now allowed the oil companies to “drill, baby, drill”, but what are they going to drill with, a Craftsman cordless?

Drilling rigs and the experienced crews to man them remain in short supply. Even assuming that we find pretty significant amounts of oil in the eastern Gulf of Mexico, it will not be available for several years and will not make a significant change in the world-oil picture. There is both a real need and the cash available to build new and upgrade existing drilling rigs, which means that business will remain very strong for a firm like National Oilwell Varco (NYSE: NOV).

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