Zacks Analyst Blog Highlights: Rite Aid, Wal-Mart, SK Telecom, China Unicom and Earthlink

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: Rite Aid Corporation (NYSE: RAD), Wal-Mart (NYSE: WMT), SK Telecom Co., Ltd. (NYSE: SKM), China Unicom (NYSE: CHU) and Earthlink (Nasdaq: ELNK).

See the latest posts to the Analyst Blog: http://www.zacks.com/blog/post_info.html?g=6

Here are highlights from Monday’s Analyst Blog:

Risks with Rite Aid Turnaround

Management at the Rite Aid Corporation (NYSE: RAD) is executing a turnaround strategy centered on increasing the profitability of the existing store base, which includes improving the product mix with generic and private label products. Nevertheless, management acquired the Brooks Eckerd chain prior to a convincing turnaround in profitability.

Also, Wal-Mart's (NYSE: WMT) initiative to enter the retail generic drug market should pressure the company's pharmacy margin. Importantly, the company has a large debt burden. Given management's EPS guidance for fiscal 2009, the stock is rated a Sell.

Wal-Mart's entry into the retail generic drug market may prove detrimental to Rite Aid's pharmacy sales. Given the company's structural competitive disadvantages and high debt position, the stock should be valued on a price-to-sales basis. Most recently, the stock declined to $1.95 or 0.058 times expected post-merger annualized sales.

Due to the company being in a turnaround phase with a high debt burden, the determination of Rite Aid's stock valuation is challenging. Until there is strong evidence of sales improvement, the tentative target price is $2.50 based on a 0.075 price-to-sales ratio (based on expected post-merger annualized sales).

Fair Value on SK Telecom

SK Telecom Co., Ltd. (NYSE: SKM) is trading at a forward multiple of 9.2x our fiscal year 2008 EPADR estimate, which is at a discount to its peers in the industry. While growth prospects may be limited in South Korea, SK Telecom is pursuing business opportunities in Vietnam and other emerging markets, including a partnership with China Unicom (NYSE: CHU).

The company also instituted a share buyback to bolster shareholder return in addition to its attractive dividend yield. Downside is limited, in our view, and we provide a Hold rating until we have more visibility regarding international growth and improved earnings in 2008. We also await signs of momentum in relation to SK Telecom's business prospects with partners Earthlink (Nasdaq: ELNK) in the United States and China Unicom in Asia.

We believe the current valuation adequately reflects the company's progress and provides limited appreciation opportunity over the next six months. We reiterate our Hold recommendation with a six-month target price of $25 based on 10x our fiscal year 2008 EPADR estimate more in line with the peer group.

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=2677

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.