Zacks Bull and Bear of the Day Highlights: The Medicines Company, Hibbett Sports, Sepracor, Johnson Controls and ASM International

CHICAGO--(BUSINESS WIRE)--Zacks Equity Research highlights The Medicines Company (Nasdaq: MDCO) as the Bull of the Day and Hibbett Sports (Nasdaq: HIBB) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Sepracor, Inc. (Nasdaq: SEPR), Johnson Controls (NYSE: JCI) and ASM International N.V. (Nasdaq: ASMI).

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: The Medicines Company (Nasdaq: MDCO)

The Medicines Co.’s lead product is Angiomax, an anticoagulant approved in the U.S. and other countries for use in patients undergoing coronary angioplasty procedures. We believe that recent positive data from two trials, ACUITY and HORIZON, will help boost Angiomax sales in the coming quarters.

We are encouraged both by the strong sales of Angiomax in the U.S. during the second quarter and the stabilization of the percutaneous coronary intervention market seen over the past few months. We are also feeling more confident in the eventually extension of the Angiomax patent beyond 2010.

Besides this, the company received approval for Cleviprex (calcium channel blocker) in August, and late-stage candidate Cangrelor (anticoagulant) is progressing in phase III trials. As Angiomax continues to ramp, and new products such as Cleviprex and Cangrelor come online, The Medicines Co. is expected to see 23% CAGR in revenues and 70% CAGR in earnings over the next five years.

We are optimistic on the future of the company and see $32 as a near-term target. Our target price is derived by applying an industry average 20x multiple (peer-group average) to our 2011 EPS forecast of $2.64 GAAP EPS, and then discounting back to present day at 20%.

Bear of the Day: Hibbett Sports (Nasdaq: HIBB)

The company’s sales continue to look pretty good, but that sales growth is coming at the expense of its profit margins. Compared to the second quarter of last year, its gross margin was down 40 basis points (bps) and its operating margin was down 80 bps.

We continue to believe the difficult consumer spending environment will pressure the company’s results. We maintain our Sell rating. Our target price is $16, which is about 16x our fiscal 2009 EPS estimate and in-line with the company’s long-term earnings growth rate.

There are still too many near-term negatives that prevent us from becoming too bullish on the retail group. These negatives are well known and include a weak economy (possible recession), continued deterioration in housing, dislocations in the credit markets, higher food and energy prices, and a lack of consumer confidence. Clearly, these risks are negatively impacting all areas of retail. In recent months, several economic reports have pointed to weak economic growth.

Latest Posts on the Zacks Analyst Blog:

Sepracor, Inc. (Nasdaq: SEPR)

Sepracor business fundamentals have been mixed over the past several quarters. Lunesta sales remain weak, post growth of only 4% in the second quarter. We see little that can be done to reaccelerate trends in the U.S. With several new sleep medications coming to the market in the next few years, we fail to see whatever drives market share back above 15%.

As such, we find it hard to believe Sepracor’s stock will outperform while Lunesta treads water. Thankfully, we are pleased to see the management looking to move beyond Lunesta and expanding its respiratory franchise with the recent additions or two new products and several technology licensing deals. Additionally, the mid-stage pipeline is progressing nicely.

Johnson Controls (NYSE: JCI)

Johnson Controls’ cost-reduction efforts, accretive acquisitions and healthy operating cash flows are driving the stock. Further, JCI commands a strong position in its markets. The company has started benefiting from the York acquisition and will further profit as it begins to integrate the Delphi Battery business.

However, with the Plastech joint venture, the company is expected to incur high restructuring expenses, which would affect earnings negatively. JCI also reduced earnings guidance by 5% to 6% for 2008. A weakening product mix and raw material/price squeeze along with a weak domestic automotive market leads us to rate the stock a Hold with a target of $28.50.

ASM International N.V. (Nasdaq: ASMI)

ASM International is an OEM [original equipment manufacturer] of both front-end and back-end semiconductor manufacturing equipment. The company has a growing presence in Asia.

The back-end business has gained significant momentum in the past two years, while the front end business has struggled to become profitable. On June 6, 2008, Applied Materials offered to buy two of ASM's units for $400 million to $500 million. ASM has so far shunned all offers. The break-up value of the firm could be $30.00 per share. We rate the shares of ASMI a Buy.

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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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