Zacks Bull and Bear of the Day Highlights: China Mobile, Amylin, The Progressive Company, Castle Brands and Baxter International

CHICAGO--(BUSINESS WIRE)--Zacks Equity Research highlights China Mobile (NYSE: CHL) as the Bull of the Day and Amylin Pharmaceuticals (Nasdaq: AMLN) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on The Progressive Company (NYSE: PRG), Castle Brands (NYSE: ROX) and Baxter International (NYSE: BAX). Full analysis of all these stocks is available at http://at.zacks.com/?id=2676.

Here is a synopsis of all five stocks:

Bull of the Day: China Mobile (NYSE: CHL)

We maintain our Buy recommendation with a higher valuation target for China Mobile, the largest mobile service provider of the world according to subscriber count, following its first quarter 2008 financial results, in line with our expectations. Successful expansion initiatives in rural regions of China, along with effective network optimization strategies and the introduction of customized mobile value-added services for different market segments, were enabling factors during the reporting period. China Mobile currently commands 69% share of the total Chinese wireless market. Given the low level of mobile penetration in this region, significant opportunities remain for the company.

Bear of the Day: Amylin Pharmaceuticals (Nasdaq: AMLN)

Sales of Byetta have disappointed over the past several quarters. Specially, the first quarter 2008 was very weak, albeit in part due to wholesaler de-stocking. However, the Amylin story is tied to the success or failure of phase III potential blockbuster, exenatide LAR. At this time the valuation on Amylin is not attractive. The stock is trading at 21x our 2012 EPS estimate well above the peer-group at 10x and that estimate assumes LAR posts sales over $1.5 billion. In the meantime, there are few catalysts and operating expenses are soaring. We would avoid the name.

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The Progressive Company (NYSE: PRG)

While 1Q08 results were a penny ahead of our expectations, results for The Progressive Company were down year-over-year as rate reduction aid to the in premiums. Historically, PGR has been considered one of the best run and most profitable personal lines insurers in the industry, demonstrated by stronger premium growth and substantially higher ROE than most of its peers.

However, as the competition continues to intensify, premium and earnings growth has slowed, a trend that we expect to continue. Therefore, we reiterate our Hold recommendation on the shares of PGR.

Based on 1Q07 results, we are presently maintaining our fiscal year 2008 and 2009 EPS targets of $1.35 per share and $1.35 per share, respectively. At the current price, the shares of Progressive trade at 2.56x its 1Q08 book value of $7.01 per share. The company's multiple is currently 99 basis points above its peer group median (which is down approximately 120 basis points from six quarters ago, and down 1 basis point sequentially), reflecting its long track record of superior profitability.

Castle Brands (NYSE: ROX)

Castle Brands is a small capitalization company in the premium spirits industry. The company has an established distribution network in the United States. Despite rapid sales growth garnered through strategic relationships, joint ventures and acquisitions, the company has consistently operated at a loss, being funded by financing activities, including its IPO in April, 2006 and a private placement in May, 2007.

The value of the company is in its distribution network and the national distribution agreements for certain brand name premium spirits. The stock's rating is a Hold.

Since the company has consistently operated at a loss and with negative operating cash flow, the stock is best valued on a price-to-sales basis. Since going public, the stock has traded between 0.49 and 3.03 times sales. The stock is currently selling at a P/S multiple of 0.49.

Baxter International (NYSE: BAX)

Baxter International's first quarter results beat our estimates on slightly higher revenues and gross margin. A lower effective tax rate offset operating margin pressures. Despite strong comparisons in early 2008, management expects 8% revenue growth and EPS growth of 14-16% in 2008. Guidance assumes mid-2008 U.S. re-entry of COLLEAGUE and 27% growth in vaccines. However, it was the lower tax rate that offset increased operating margin pressure.

The company announced that its Board of Directors has approved the repurchase of an additional $2 billion of the company's common stock to be executed upon completion of the company's existing share repurchase authorization. Baxter has less than $700 million of remaining authorization under its previous $2 billion share repurchase program that was authorized in March 2007. Shares will be repurchased in the open market at times and amounts determined by management based on its evaluation of market conditions and other factors.

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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