For Immediate Release

Chicago, IL – June 16, 2009 – 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: Community Health Systems Inc. (CYH), Universal Health Services Inc. (UHS), Merck & Co., Inc. (MRK), Schering-Plough (SGP) and Johnson & Johnson (JNJ).

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Here are highlights from Monday’s Analyst Blog:

Cuts in Healthcare Spending

The actual breakdown of the $313 billion proposed cuts includes: $110 billion in productivity adjustments to Medicare payment updates; $106 billion in reduced hospital subsidies for treating the uninsured as coverage increases; $75 billion from Medicare Part D drugs; and, $22 billion from “Other.”

The President added that these measures would extend the solvency of Medicare’s Hospital Insurance Trust Fund by seven years to about 2024, and reduce beneficiary premiums for physician and outpatient services by about $43 billion over the next 10 years. As Congress continues to draft legislation, it remains to be seen whether the government will take a position or gain the necessary support for a “public fund” option.

We currently rate both our hospital operators, Community Health Systems Inc. (CYH) and Universal Health Services Inc. (UHS), with Hold recommendations. Nonetheless, our preferred exposure in the sector would be in UHS given its relatively well-diversified revenue mix and the growing contribution of higher margin behavioral services.

Merck Needs Schering-Plough

Based on our earnings model, we expect Merck & Co., Inc. (MRK) to post flat EPS growth from 2008 – 2013 due to the combination of patent expirations of key drugs, recent pipeline failures and softening sales of Gardasil and Singulair.

The proposed merger with Schering-Plough (SGP) is clearly an attempt to address Merck’s slowing sales and EPS growth. Schering-Plough has relatively little exposure to patent cliffs through 2013 and possesses one of the strongest late-stage pipelines in big-pharma.

The deal will add immediate synergies relative to the Vytorin/Zetia joint venture and should offer little overlap in currently marketed products and pipeline compounds. Given the minimal product overlap and relative ease in combining the cholesterol business, we would expect the combination to provide significant synergistic opportunities with combining sales, marketing, research and other back-office functions.

The merger is expected to be slightly accretive to non-GAAP EPS in the first full year, and significantly accretive afterwards. Merck believes that the merger will result in non-GAAP EPS annual growth in the high-single digits from 2009 – 2013 (using Merck’s stand-alone non-GAAP EPS as the 2009 base). This is premised on producing $3.5 billion in annual cost savings but apparently not dependent, according to Merck, on retaining rights to Remicade and golimumab.

Given that we model combined sales of both drugs to be over $3.5 billion in 2013, we are skeptical that their guidance is reasonable if they lose the ex-U.S. rights to both compounds.

The merger is expected to close in the fourth quarter. We believe it’s in Merck’s best interests to get the deal done, notwithstanding potentially material concessions to Johnson & Johnson (JNJ) relative to rights to Remicade and golimumab.

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