Zacks Analyst Blog Highlights: Pride International, Lexicon Pharmaceuticals Inc., AstraZeneca Plc, Sinopec Shanghai Petrochemical Co. and Virgin Media

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: Pride International, Inc. (NYSE: PDE), Lexicon Pharmaceuticals Inc. (Nasdaq: LXRS), AstraZeneca Plc (NYSE: AZN), Sinopec Shanghai Petrochemical Co. (NYSE: SHI) and Virgin Media Inc. (Nasdaq: VMED).

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Here are highlights from Monday’s Analyst Blog:

Pride a Top Pure-Play Driller

Pride International, Inc. (NYSE: PDE) reported solid third-quarter results, cautioned of near-term softness in the GoM jackup market and announced plans to divest its shallow-water Gulf of Mexico [GoM] fleet to become a pure-play deepwater driller.

Revenue and operating earnings from the company’s deepwater fleet increased 37% and 60% year over year, respectively. With a $10 billion (including bonus) of backlog, Pride International offers significant earnings and cash flow visibility. We have lowered our earnings estimates to reflect a soft outlook for the GoM jackup fleet and relatively higher costs. Our new 2008 and 2009 EPS estimates are $3.62 and $4.00, down from $3.65) and $4.30, respectively.

Buy Lexicon Pharma to $3.50

Lexicon Pharmaceuticals Inc. (Nasdaq: LXRX) is focused on defining the functions of genes using the "gene knockout" technology. Based on its proprietary technology, Lexicon has attracted both drug-based collaborations and strategic equity investors.

The company is currently engaged in research and development of small molecule drugs in a broad area of diseases. We are pleased with the progress made by Lexicon Pharmaceuticals with its "gene knockout" technology and its 10TO10 clinical program.

AstraZeneca Pressured by Generics

AstraZeneca Plc (NYSE: AZN) is facing a number of challenges, most notably from generic competition to Toprol-XL and Nexium. Management is determined to grow earnings through a combination of expanding the topline and cost cutting. This is in contrast to many of large-cap pharma companies, which are wringing out earnings solely through significant cost-cutting strategies, but with virtually no revenue growth.

While Crestor, Seroquel and Symbicort will continue to add substantially to the topline, company-wide revenue growth will slow considerably over the next few years. Management’s productivity and synergy initiatives should benefit operating margins and earnings in the next few years which should help grow EPS faster than revenues.

Shanghai Petrochem Losses Mount

Shanghai Petrochemical (NYSE: SHI), one of the largest petrochemical enterprises in China, reported third quarter 2008 results on October 29. In the reported quarter, the company recorded a loss per share of $0.04, compared to a loss of $0.0017 per share in the year-ago quarter.

High crude prices and government caps on refined oil products were the contributing factors to the loss. Operating revenue in the quarter rose 33.77% to $2.19 billion. For 2008, the company expects to incur a significant loss, compared to a profit of $205.11 million in 2007.

Virgin Media in Early Turnaround

Virgin Media Inc. (Nasdaq: VMED) is, in our view, in the early stages of a turnaround, poised to generate strong free cash-flow growth and improved EPS in 2009. A new management team is re-branding the services (formerly notorious for poor customer service and rolling out digital services to stabilize ARPU), reduce churn and slow its market share drain from the onslaught of new entrants into VMED's markets.

The company remains focused on leading in next-generation broadband and redefining the TV experience through VOD [video on-demand]. On the cost side, we expect lower interest expense, capital expenditures and income taxes to increase free cash flow in 2008.

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