Chicago, IL – November 20, 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: Aetna Inc. (AET), UnitedHealth Group Inc. (UNH), WellPoint Inc. (WLP), Assurant Inc. (AIZ) and Cigna Corp. (CI).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Thursday’s Analyst Blog:

Aetna Axes Jobs

In a bid to become more efficient, the health insurer Aetna Inc. (AET) announced on Wednesday its intention to shed a total of 1,250 jobs or about 3.5% of its total workforce by the first quarter of 2010. Management intends to do so in two phases, by slashing 625 jobs now and the remaining early next year.

The company expects to record after-tax restructuring charges of $40 million in fourth quarter 2009. Last December, the company cut 1,000 jobs, which was 3% of its total workforce. The company plans to slash majority of the jobs at its headquarters in Connecticut.

Aetna with a total head count of 35,500 is eliminating jobs to cope with the difficult economic environment and potential impact that the health care reform might cast on its health insurance business. Elimination of excess workforce will help streamline the business by optimizing staffing level, thereby maintaining efficiency.

During the third quarter of 2009, Aetna earned $326.2 million, or 73 cents per share. That represents an increase from $277.3 million, or 58 cents per share, in the same quarter last year. Membership has slumped throughout the health insurance sector as employers have cut jobs, reducing the number of people covered by employer-sponsored plans.

Aetna rivals UnitedHealth Group Inc. (UNH) and WellPoint Inc. (WLP) both recently saw enrollment declines in the third quarter. Last week, Assurant Health, a division of Assurant Inc. (AIZ) announced that it has slashed 94 jobs. Earlier during the year, peers Cigna Corp. (CI) cut 1,100 jobs and Wellpoint Inc. eliminated nearly 1,500 jobs.

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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=5517

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 at http://at.zacks.com/?id=5518.

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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.

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Fortunately during recessions, the federal government usually will step in and provide emergency extended benefits. However this recession has gone on for so long, and we have so many long-term unemployed, that millions were in danger of losing even those extended benefits. Fortunately the Senate finally got around to extending those benefits for up to another 20 weeks (depending on the overall level of unemployment in that state). Still, unemployment benefits only replace a fraction of what people were earning before they lost their jobs. This means that as soon as people get their pink slips, they will reduce their spending. However, depending on how long they expect to be out of work, they do not bring their spending levels down all the way to their new unemployment insurance income level. There are all sorts of spending categories that are at least semi fixed. If you think you will get a new job soon, you don't cancel little Jimmy's ballet lessons, or Betty's karate lessons. Instead you draw down your savings and use your American Express (AXP) card more.

However, as the weeks go by and you get no response from all the resumes you sent out, more and more things start to go by the wayside. But still does it make sense to quit the country club and lose the $20,000 initiation fee you paid, especially now that you actually have time to use it? Well after a few months you have to bite that bullet too. In the meantime, your non-retirement savings are probably about gone. Going into this recession the savings rate had been close to zero, so it is a pretty safe bet that most people did not have a lot of savings outside their 401-ks or IRAs. You have probably run up your balance on your credit card, but the card companies are getting wise to that and are starting to cut back the available credit limits for millions of accounts. That is a wise move on their part individually, but collectively for the economy, it acts to reduce overall demand.

Oh, and since a big factor in your credit rating is how much credit card debt you have relative to your available limit, both increasing your balance and the bank cutting back your maximum availability will conspire to knock off more than a hundred points from your FICO score. In past downturns, especially recent ones, if the unemployed person were a homeowner, he could tap the equity in the house. Now with millions and millions of homes worth less than the amount of the mortgage, or at least very close to it, that option is not open. Indeed this time around it seems that people are more likely to go in the other direction.

To survive, they are simply not paying on their mortgage and waiting for the sheriff to show up at the door to kick them out. Given the huge numbers of people who are falling behind on their mortgages, and to political efforts to slow the rate of foreclosures, this is actually a very rational strategy. In many parts of the country it has been possible to live rent and mortgage free for well over a year before actually getting kicked out of the house. That can free up a lot of cash to spend on other things. However, it is very bad news for the banks that lent the money like Bank of America (BAC) and Wells Fargo (WFC). It is also going to become a serious issue for the Federal Reserve since it is in the process of buying $1.25 trillion worth of mortgaged backed paper. True, the paper is guaranteed by Fannie (FNM) and Freddie (FRE), but since the taxpayers own 80% of both of them, what is the difference? People have to start tapping their 401-ks and IRAs. While the stock market has recovered nicely, it is still far below its peak, making that option even more painful, along with the 10% penalty imposed if you start to withdraw money from those accounts before retirement age.

By the time people have been out of work for six months or more, they have usually depleted their financial resources. Remember that on average, someone who is out of work has been out of work for 26.9 weeks now, and half of all the unemployed have been looking for work for more than 18.7 weeks. That smashes any record prior to this downturn. At the worst point in the Reagan recession, half of all the unemployed were out of work for more than 12.3 weeks. In fact, since the median duration started being tracked at the beginning of 1967, the median duration has only been in the double digits for 36 of those 502 months, and 14 of those have been during his downturn.

To those who say the stimulus bill has not helped, tell that to the almost 5.6 million people who have been out of work for more than six months. If not for the emergency benefits in that bill, they would be left with no income as soon as they passed that mark. I suspect that the vast majority of people who are in that category assumed that they would have found a new job by now when they first got laid off, and thus did not cut back their spending as fast as, in retrospect, they should have when they first got their pink 
slip.



It is long term unemployment that is the hallmark of a recession. The graph below shows the number of unemployed (in thousands) in each duration group back to 1960. This is not adjusted for the rather substantial increase in the total population over that period, so some upward trend to the numbers would be normal. Notice how stable the pink short term unemployment line is. There are always people getting laid off, and people getting hired. In good times, the number of people becoming unemployed does not really fall that much, it is just that they don't stay unemployed for all that long. They are either able to find a new job quickly, or in the case of many manufacturing jobs, get called back to work by their previous employer.

The light blue line of moderate length unemployment (5 to 14 weeks) shows a little bit more cyclical behavior, but nothing like the two longer term measures, the yellow 15 to 26 week group and the dark blue over 26 week long term group. What is striking about this recession is just how high that long term dark blue line has soared. While these graphs do not have the recession bars in, I would note that the level of long term unemployment usually continues to rise for many months after a recession ends. The shorter term groups tend to turn down well before the long term group does. This means that the situation is likely to continue to get worse before it gets better.



When these people do return to work, it is highly unlikely that they will be earning anything close to what they were earning before they got laid off. Many will be homeless, without any savings and in pretty desperate shape. We have already seen a steep rise in the poverty rate, which rose to 13.2% in 2008 from 12.5% in 2007 (see Census Bureau: Poverty Rising and Income, Poverty & Health Insurance).

Among children, the poverty rate rose to 19.0% in 2008 from 18.0% in 2007. I would be shocked if it does not exceed the one in five level when the statistics come out next summer for 2009. Since health care coverage is largely tied to employment in this country, the rising number of unemployed means that the number of people without health insurance, already at 46.3 million in 2008, is likely to jump further. While it is true that the stimulus package did subsidize COBRA insurance by as much as 65%, by the time people are unemployed for more than six months, it is very difficult for most of them to be able to afford even those subsidized premiums. When those people get sick, their only option is to go to the hospital emergency room, which is a very expensive and inefficient way of being treated. It is not free either, the hospital will try to bill them for the services, and even send debt collectors on them, although in most of these cases they will be trying to get blood from a stone.

For many, it simply means that they go without treatment, other than over-the-counter medicines they buy at Walgreen's (WAG). If it turns out to be something more serious, it very often results in death. A Harvard study recently estimated that 46,000 Americans die prematurely each year because of a lack of health care coverage. That is a national disgrace.

While unemployment is a lagging indicator of the economy, it does play a role in the economy going forward. It will be very hard to sustain the surprisingly strong growth we have seen in recent months if we don’t start to see some improvement in the employment picture. Yes, huge improvements in productivity are good, but people on the ground need jobs.

• The U.S. Census Bureau announced today that real median household income in the United States fell 3.6 percent between 2007 and 2008, from $52,163 to $50,303.
• The nation’s official poverty rate in 2008 was 13.2 percent, up from 12.5 percent in 2007. There were 39.8 million people in poverty in 2008, up from 37.3 million in 2007.
• The number of people without health insurance coverage rose from 45.7 million in 2007 to 46.3 million in 2008,
• In 2008, the earnings of women who worked full time, year-round was 77 percent of that for corresponding men, not statistically different from the 2007 ratio.
• The real median earnings of men who worked full time, year-round declined by 1.0 percent between 2007 and 2008, from $46,846 to $46,367. For women, the corresponding drop was 1.9 percent, from $36,451 to $35,745.
• Income inequality was statistically unchanged between 2007 and 2008, as measured by shares of aggregate household income by quintiles and the Gini index. The Gini index was 0.466 in 2008. (The Gini index is a measure of household income inequality; 0 represents perfect income equality and 1 perfect inequality.)
• Between 2007 and 2008, the number of people covered by private health insurance decreased from 202.0 million to 201.0 million, while the number covered by government health insurance climbed from 83.0 million to 87.4 million. The number covered by employment-based health insurance declined from 177.4 million to 176.3 million.
• The number of uninsured children declined from 8.1 million (11.0 percent) in 2007 to 7.3 million (9.9 percent) in 2008.

Why do I say that the official poverty rate understates poverty? Because the formula was set up back in the early 1960’s and was based on the percentage of income spent on food. Since then, the relative price of food has plummeted, while the cost of other necessities like shelter, health care and education has skyrocketed.

Frankly, I am surprised that the number of uninsured did not rise more than it did, given that most health insurance in the country is tied to employment and unemployment rose significantly over the course of 2008. However, the worst job losses for the year were at the very end.

I would expect that the number of uninsured will jump again in 2009. A big reason that the number of total uninsured did not rise further was the expansion of the S-Chip program for children. Without the drop in uninsured children due to the program, the increase in total uninsured would have been more than twice what it was. "Socialist" medicine, also known as Medicare, Medicaid and the VA, has managed to pick up the slack and provide coverage to those who are losing their private sector coverage.

It was good to see that the Gini index did not increase further -- it is the best single measure out there of income inequality, and the U.S. is already off the charts by developed country standards. With a Gini coefficient of 0.466, the distribution of income in the U.S. far more closely resembles that of China, Mexico and Rwanda than it does that of Canada, the UK or Australia. Our Gini index is twice that of Sweden, which has the world’s flattest income distribution. The highest level of inequality in the world is Namibia at 0.707. We are actually closer to Haiti (0.592) than we are to Canada (0.320). To see the international comparisons check here.

With half the households in the U.S. earning $50,303, it means that half the population can only afford to shop at discounters like Walmart (WMT) or Family Dollar (FDO). They have to spend on staples and necessities, not on discretionary items.

People in the lower half of the income distribution are far less likely to have health insurance coverage. If not provided by the job (low-wage jobs are much less likely to provide insurance than high-income jobs), how are they supposed to buy coverage when the average individual family plan costs $12,000 a year?

The result is that they will only get health care when they show up at the emergency room, which is a very expensive way to care for people. They also probably wait until they are very sick to seek treatment; thus problems that if caught early could have been solved with an Rx for antibiotics result in hospital stays. The only other option for them is death, and an estimated 20,000 people die each year in this country from easily treatable conditions because they have no health insurance.

With more than 25 years of experience as an analyst and portfolio manager, Dirk van Dijk is Zacks’ Chief Equity Strategist.  He also manages the new long-term investing service, Strategic Investor">Strategic Investor.

Chicago, IL – August 28, 2009 – Zacks Equity Research highlights Acergy (ACGY) as the Bull of the Day and Loews Corporation (L) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Bank of America (BAC), Wal-Mart (WMT) and Macy's (M).

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:

Acergy (ACGY) posted better-than-expected second quarter 2009 results, though revenue and backlog slipped, reflecting the tentative operating environment stemming from commodity price and credit market overhang.

With a still healthy backlog, significant cash balances and no near-term refinancing requirements, Acergy remains comfortable to weather the challenging business environment.

Our continued Outperform recommendation on Acergy ADRs also reflects the company's strong leverage to the still very favorable outlook for deepwater oilfield activities and the quality of its client base, which mostly include well-capitalized oil majors or national oil companies.

Bear of the Day:

Loews Corporation’s (L) second-quarter income from continuing operations came in at 78 cents per share, substantially short of the Zacks Consensus Estimate. The lower-than-expected results primarily reflect higher net investment losses.

However, underwriting performance was impressive during the quarter. A strong rebound in investment income primarily from improved limited partnership results, were also impressive during the quarter.

While the spin-off of Lorillard in 2008 eliminated the company's overhang of tobacco litigation, we think that the continuation of a stressed economic environment will have a restrictive effect on the top-line growth of the company. As such, the shares carry an Underperform recommendation from us.

Latest Posts on the Zacks Analyst Blog:

New Claims Fall Slightly

Remember that extended benefits do not last forever. Thus we really don't know if the people who are leaving are going out through the door with the beautiful lady (getting a new job) or the door with the tiger behind it (benefits exhausted, now have zero income). We will get a better idea of that next Friday (9/4) when we get the monthly jobs report.

One thing that we do know is that very high levels of long-term unemployment has been one of the defining characteristics of this recession. An estimated 1.5 million people are estimated to run out of extended benefits by the end of the year.

These people are going to be more likely to patronize the Food Bank than Bank of America (BAC), even if they were once in the middle class. They are going to be doing whatever shopping they do at the Salvation Army and Goodwill rather than at Wal-Mart (WMT). This is a second step down -- they probably switched to Wal-Mart from Macy's (M) when they got laid off.

As for health insurance, even with subsidized COBRA (also one of the Stimulus Package benefits), it will be unaffordable when you have no income at all. The 47 million number for the uninsured that is routinely used in the health care debate is from last year, and thus significantly understates things since in this country, your health insurance is tied to your job.

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.

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.

About the Analyst Blog

Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.

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 analyst 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 by visiting http://at.zacks.com/?id=5508.

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 at http://at.zacks.com/?id=5509.

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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.

Contact:
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Web Content Editor
312-265-9380
Visit: www.zacks.com

Chicago, IL – August 27, 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: United Heathcare Group (UNH), Aetna (AET), Wet Seal Inc. (WTSLA), VeriSign Inc. (VRSN) and Syniverse Holdings Inc. (SVR).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Wednesday’s Analyst Blog:

CBO Overstates Healthcare Costs

Some of the more outrageous types of misconduct by the likes of United Heathcare Group (UNH) and Aetna (AET) might be curbed, such as the cancelling of policies as soon as someone gets sick and puts in a substantial claim. Morally, that is just plain fraud ("You didn't tell us that you went to see a dermatologist for your acne when you were 16, so we will not cover your cancer treatment at age 55"), although the insurance companies have very good lawyers who write the contracts to make sure they can get away with it.

It might even end the practice of discriminating against sick people (aka pre-existing conditions). It will come at the expense of using the force of law to get the young and the healthy to buy coverage. Since the young, on average, seldom make expensive claims, those customers would be a gold mine for the insurance companies.

None of those things are likely to stop the relentless rise in Health Care costs as a share of GDP. The nation may go bankrupt, but the health insurance companies will not. They will be even more prosperous than they are today. Their investment in people like Sen. Max Baucus (D-MT) and Kent Conrad (D-ND) has to go down as one of the most profitable in history.

Wet Seal Reports Modest Results

Wet Seal Inc. (WTSLA) reported modest results for the second quarter with earnings of 3 cents per share, which was in-line with the Zacks Consensus Estimate. However, earnings were down 9 cents year-over-year. Wet Seal is a specialty retailer, operating apparel and accessory items stores for female customers in the U.S.

Net sales for the quarter declined 8.5% year-over-year to $136.4 million. However, Internet sales grew 12.7% year-over-year. Overall comparable same-store sales declined 10.6%. Comparable same-store sales in the Wet Seal segment declined 11.9%, and at the Arden B segment it declined 4.1% year-over-year.

VeriSign Divests Messaging Biz

VeriSign Inc. (VRSN) yesterday agreed to sell its messaging business to Syniverse Holdings Inc. (SVR) for $175 million. The transaction is subject to certain closing conditions and regulatory approvals.

Headquartered in Mountain View, California, VeriSign provides essential Internet infrastructure services to companies, service providers and website owners.

Tampa, Florida-based Syniverse provides wireless voice and data services for telecommunications companies worldwide. The company said that the deal will expand its mobile messaging capabilities and increase its global footprint through nearly 300 additional employees in the United States and Asia Pacific.

The messaging business has had an annual revenue run-rate of approximately $140 million over the last 12 months. With this divestiture, VeriSign will be left with only one of its thirteen businesses to divest. From November 2007 to date, the company has sold twelve non-core units for $750 million. The business which remains to be sold is Global Security Consulting.

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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=5517

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 at http://at.zacks.com/?id=5518.

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

Follow us on Twitter: http://twitter.com/zacksresearch

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

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.

Contact:
Mark Vickery
Web Content Editor
312-265-9380
Visit: www.zacks.com

Chicago, IL – August 27, 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: China Life Insurance Company (LFC), American International Group (AIG), Deutsche Bank (DB), Morgan Stanley (MS) and Amgen (AMGN).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Wednesday’s Analyst Blog:

China Life’s Profits Grow

China Life Insurance Company (LFC), the leading life insurer in China, has posted a 15% rise in profits in the first half of 2009 compared to the prior-year period. The company earned 18.2 billion yuan ($2.7 billion) in the first half of 2009 driven by gains realized on financial investments. The gains stemmed from the capital market rally in China.

Gross yield on its investments in the period was up 3.27% from 2.31%. Gross written premiums and policy fees were up 11% to 87.86 billion yuan. The increase was mainly attributable to an increase in its insurance business. Renewal premiums grew 23% year-over-year, while the proportion of renewal premiums to gross written premiums increased to 66.84% in the first half of 2009 from 60.44% in the year-ago period.

The company said that it may invest in AIA, which is planning a Hong Kong initial public offering (IPO). AIA is the Asia unit of American International Group (AIG), Deutsche Bank (DB) and Morgan Stanley (MS) have been appointed by AIG as its joint global coordinators for a more than $4 billion IPO for AIA. The company is also eyeing an equity tie-up with Agricultural Bank of China. However, the company does not intend to sell its 5.1% stake in Minsheng Banking Corporation.

The company is also a leading provider of annuity products and life insurance for both individuals and groups and a leading provider of accident and health insurance. China Life’s market share in the first half of 2009 was approximately 39.2%.

Amgen’s Kidney Drug Fails

Yesterday, Amgen (AMGN) said that Aranesp failed in a large, randomized, double-blind, placebo-controlled, phase III study that was conducted in patients with chronic kidney disease (not requiring dialysis), anemia and type II diabetes.

The study, referred to as the Trial to Reduce Cardiovascular Endpoints with Aranesp Therapy (TREAT), had two primary endpoints. The first evaluated time to all-cause mortality or cardiovascular morbidity including heart attack, congestive heart failure, hospitalization for angina, or stroke. The second primary endpoint evaluated time to all-cause mortality or chronic dialysis.

Aranesp could not show statistically significant improvement in either. While a higher number of strokes were observed in the Aranesp-treated group compared to the placebo arm, we note that drug’s label already carries a warning regarding the stroke events.

Full efficacy and safety analyses are yet to take place. Amgen will present full results at an upcoming medical meeting later this year.

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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=5517

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 at http://at.zacks.com/?id=5518.

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

Follow us on Twitter: http://twitter.com/zacksresearch

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

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.

Contact:
Mark Vickery
Web Content Editor
312-265-9380
Visit: www.zacks.com

Chicago, IL – August 3, 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: Cigna (CI), United Health Care (UNH), Aetna (AET), Ford (F) and Toyota (TM).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Friday’s Analyst Blog:

What's It Worth to Avoid Competition?

There is an extremely interesting post that looks at both the change in the Intrade odds of having a public health care option and the movement in the stock prices of the three biggest health insurance companies, Cigna (CI), United Health Care (UNH) and Aetna (AET) in response to the Senate Finance committee’s decision not to include such a plan in its version of Health Care Reform. Clearly the current system of loosely regulated, for-profit, regional oligopolies is to the great benefit of these firms.

I also think the evidence is pretty clear that it is not to the benefit of the American public. This is not a system designed to maximize the quality of care or hold down costs or reduce conflicts of interest. In most of the country, the combined market share of the top two health insurance companies exceeds 60%, so yes, we do have a system of regional oligopolies.

But just how much is it worth to them? Well, the market cap of those three companies increased by about $4.5 billion in response to the announcement by the “Group of Six." At the same time, the betting odds on having a public plan dropped from 45% (somewhat less than a coin flip) to 30% in reaction to the announcement.

GDP Down 1.0% - A Big Improvement

A big part of the improvement in trade in both quarters was lower oil prices. That part is not likely to be repeated. If residential investment is just at 0.0% in the third quarter, it will be a big help to the overall GDP numbers.

Inventories are likely to swing from being a drag on growth to being a positive for growth, and possibly a very significant one. One area to watch will be the rebuilding of auto inventories. Increases in production at Ford (F) and Toyota (TM) as well as at still-non-Big-Board-traded GM and Chrysler are likely to add to growth. The "Cash for Clunkers" was a big success in clearing the lots (so much so it ran out of money almost immediately, but is likely to get reloaded).

Not that I am expecting auto sales to return to the levels of a few years ago anytime soon, but going from an annual sales rate of just over 9 million a year to 12 million a year is a substantial percentage increase, swinging from being a negative to being a positive for growth.

These are the signs one generally sees in the early stages of an economic recovery. I still think it is going to be a weak recovery and not enough to bring down unemployment anytime soon. To get unemployment to fall, we need to generate growth of about 2.0%.

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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=5517

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 at http://at.zacks.com/?id=5518.

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Chicago, IL – July 29, 2009 – Zacks Equity Research highlights NTT DoCoMo (DCM) as the Bull of the Day and Altria Group (MO) the Bear of the Day. In addition, Zacks Equity Research provides analysis on United Health Care (UNH), Aetna (AET) and Humana (HUM).

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:

We maintain our Buy recommendation and the same valuation target for NTT DoCoMo (DCM), the largest mobile service provider in Japan, ahead of first quarter of fiscal 2010 financial results. The company currently maintains a leading 50% share of the Japanese wireless market.

DCM upgraded 98% of its total coverage area with 3G HSDPA technologies and emerging 4G LTE networks are planned for deployment through 2010. DCM's decisions to focus on mobile content along with a renewed geographic expansion drive outside Japan are positive indicators.

Furthermore, the company is launching an innovative on-line money transfer service. We consider DCM as an attractive long-term investment opportunity.

Bear of the Day:

Altria Group (MO) is the leading domestic tobacco company, which generates significant cash flow and the stock has a high dividend yield. In an effort to expand into adjacent categories, Altria acquired UST, the world's leading moist smokeless tobacco manufacturer.

However, the company is engaged in numerous tobacco liability suits. Several large punitive damage awards have been upheld, most recently the $79.5 million judgment in the Williams case in 2009.

In addition, the 150+% federal excise tax increase should dramatically reduce cigarette volume. A Sell rating is recommended.

Latest Posts on the Zacks Analyst Blog:

“Blue-Dogging" Health Care

Probably the most important tool on the table for controlling health care costs is the public option. Essentially, it will let individuals buy into Medicare early. Medicare is a FAR more efficient system than the private health insurance system. For each dollar that is spent on Medicare, more than 98 cents goes to paying for actual medical costs.

At the major health insurance companies like United Health Care (UNH), Aetna (AET) and Humana (HUM), less than 80% goes to pay for doctors and hospitals. The rest of the money goes to overhead -- principally trying to get lots of people to apply for health care coverage and then to weed out the ones that are more likely to get sick. These companies also spend a lot of money on trying to figure out if someone had an undisclosed pre-existing condition, so they can deny coverage to people who thought they were insured when they actually get sick and file a claim.

The health insurance industry is rightly afraid of the public option, because it is a much better mousetrap and will eventually lead to the industry having a much smaller, supplemental role (equivalent to the current medigap policies offered to supplement Medicare) rather than being a huge industry.

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.

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.

About the Analyst Blog

Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.

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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 analyst 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 by visiting http://at.zacks.com/?id=5508.

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 at http://at.zacks.com/?id=5509.

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Follow us on Twitter: http://twitter.com/zacksresearch

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Company Description

China Life Insurance is China's largest life insurance company. It provides individual and group life insurance and accident and health insurance. With its network of agents, it is able to reach all provinces and areas in China compared to its competitors which have reach only in major cities.

Bullish on 2009

China Life saw first-quarter net income climb 55% year over year as investment income rose due to a rebound in the Shanghai stock market. China Life is one of China's largest institutional investors.

Covering analysts are bullish on the company for the full year. 2 out of 3 covering analysts raised 2009 estimates in the last 30 days with the consensus rising 5 cents to $2.30 per share. 1 of those analysts raised in just the last week.

Growth

Analysts expect year-over-year earnings growth in 2009 of 39.19% which is much higher than the industry average of 3.80%.

Five year average growth rates are expected to be 24.25%, also above that of the industry average of 11.30%.

Income

The company pays a dividend with a current yield of 2.40%.

Fundamentals

China Life Insurance is a Zacks #2 Rank (buy) stock. It is trading with a forward P/E of 24.51. The company has a solid 1-year return on equity (ROE) of 22.99%.

The stock has been volatile. See the 6-month chart below:

Zacks Investment Research

A synopsis of today's Industry Outlook is presented below. The full article can be read at http://at.zacks.com/?id=2678.

Health technology holds promise of improved operating efficiencies for many parts of the healthcare industry, hospitals included. However, in the short term those that stand to benefit the most from the stimulus are the companies whose business models are based on information technology platforms.

One such company is BioScrip, Inc. (BIOS) , a specialty pharmacy services provider and pharmacy benefit manager. Bioscrip operates two interrelated business segments, namely: Specialty Services, which is comprised of specialty pharmacy distribution and clinical management services; and PBM Services, which is comprised of pharmacy benefit management and traditional mail services. We currently rate the stock of BioScrip a Buy.

Despite our currently neutral stance on managed care providers overall, we continue to rate WellPoint (WLP) as a Buy given its broad product offering, geographic reach and potential for added synergy gains from relatively recent acquisitions. That said, we believe the recent action by CMS to suspend the company from enrolling new patients in the health insurance Medicare Advantage plan and the prescription drug benefit, Medicare Part D will add to negative sentiment in the short term. We believe the action by CMS is reversible and highlights operational issues that can be addressed by management in the short term.

Another current Buy recommendation is NovaMed Inc. (NOVA). NOVA is an emerging healthcare services company engaged in the operation of ambulatory surgery centers (ASCs) and the provision of optical products and services to eye-care professionals. We remain positive with the company's performance to date, given the continued strength of cash flows from operations and same facility revenue growth.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today by visiting: http://at.zacks.com/?id=2679.

About Zacks 

The performance of the Zacks Rank portfolios shown above for annual and year-to-date periods are the linked monthly total returns (price changes + dividends) of equal weighted hypothetical portfolios, consisting of those stocks with the indicated Zacks Rank, assuming monthly rebalancing and zero transaction costs. These are not the returns of actual portfolios. The hypothetical portfolios were created at the beginning of each month from Jan 1988 forward based on the values of the Zacks Rank available to Zacks' clients before the beginning of each month.

The portfolios created monthly from 1988 through September 2006 exclude ADRS and are comprised of stocks that have the indicated Zacks Rank and were covered by at least two analysts at the time of the stocks inclusion in the portfolio. Starting in October 2006 and going forward, the portfolios are comprised of all stocks with the indicated Zacks Rank and do not exclude ADRs, which is more reflective of the list of stocks that customers will find on the Zacks web sites. 2007 returns are for the period of Jan 1 - Jun 30, 2007. These performance numbers have been audited from 1995 through 2003 by Autschuler Melovan, a division of American Express Financial.

Earlier in February, the $787B economic stimulus package was passed in the Senate and House. The $150B in planned healthcare spending will include $25B towards the expansion of COBRA, $20B for health technology, and $85B for Medicaid assistance to states. The package clearly aims to improve the infrastructure of the healthcare industry and ultimately lower costs and expand access to more Americans.

OPPORTUNITIES

Health technology holds promise of improved operating efficiencies for many parts of the healthcare industry, hospitals included. However, in the short term those that stand to benefit the most from the stimulus are the companies whose business models are based on information technology platforms.

One such company is BioScrip, Inc. (BIOS), a specialty pharmacy services provider and pharmacy benefit manager. Bioscrip operates two interrelated business segments, namely: Specialty Services, which is comprised of specialty pharmacy distribution and clinical management services; and PBM Services, which is comprised of pharmacy benefit management and traditional mail services. We currently rate the stock of Bioscip a Buy.

Despite our currently neutral stance on managed care providers overall, we continue to rate WellPoint (WLP) as a Buy given its broad product offering, geographic reach and potential for added synergy gains from relatively recent acquisitions. That said, we believe the recent action by CMS to suspend the company from enrolling new patients in the health insurance Medicare Advantage plan and the prescription drug benefit, Medicare Part D will add to negative sentiment in the short term. We believe the action by CMS is reversible and highlights operational issues that can be addressed by management in the short term.

Another current Buy recommendation is NovaMed Inc. (NOVA). NOVA is an emerging healthcare services company engaged in the operation of ambulatory surgery centers (ASCs) and the provision of optical products and services to eye-care professionals. We remain positive with the company's performance to date, given the continued strength of cash flows from operations and same facility revenue growth.

WEAKNESSES

Medicaid-focused managed care providers are, to some degree, countercyclical and often perform well in mild recessions. However, and despite the $85B allocated to Medicaid in the stimulus, we remain cautious at this point, given the severity of the current economic downturn and uncertainties surrounding healthcare reform. Unlike other managed care players, Medicaid managed-care companies are highly reliant on funding from state governments, which in turn are subject to budgetary constraints and policy changes at the federal level.

We expect hospitals to gain some relief from the $15B in Medicaid assistance earmarked for immediate distribution to help close budget gaps coupled with the expansion of COBRA. COBRA provides temporary continuation of health coverage in the event of a job loss.

However, we believe the hospital sector will remain under pressure for the remainder of 2009 given anticipated lower consumer spending, high unemployment, and shifts in payer mix further already weakening 4Q08 admission numbers and increasing bad debt levels. We note that hospitals by law must treat all patients in need of emergency care, regardless of whether they have insurance.

We currently rate both Community Health Systems (CYH) and Universal Health Services, Inc. (UHS) with Hold recommendations.Zacks Investment Research

When President Obama's administration released the proposed budget for the upcoming fiscal year, drug stocks quickly dropped. Fears of socialized medicine, or "Hillary-Care 2.0" turned investors away from the sector.

Was the drop warranted?

There are 6 key components to healthcare reform that could have a meaningful impact on pharmaceutical and biotechnology companies in the near future.Four of these are potentially negative, whereas the other 2 are potentially positive.

First Potential Negative: Increasing Pricing Rebates

The new proposal calls for an increase in Medicaid rebates from the current level of 15% to 21%. This equates to a 6% decrease in pricing power by all the companies in our universe into the Medicaid market. If we delve deeper into the ramification of this action, we see that the potential earnings impact for most large pharmaceutical companies is in the area of 1%, at most.

Most pharmaceutical companies average roughly 5% to 20% of their U.S.business to Medicare / Medicaid. Some companies, including Wyeth (WYE), Pfizer (PFE), and Abbott Labs (ABT) are on the low-end, whereas others, such as Bristol-Myers Squibb (BMY), Eli Lilly (LLY), Merck (MRK), and Gilead (GILD) are on the high-end.

The overall impact to the top-line is muted significantly for companies with greater sales outside the U.S., including PFE, ABT and Johnson & Johnson (JNJ).

Notice Abbott and Pfizer are on the right side of that list twice, low exposure to Medicaid, high percent of sales outside the U.S. But nevertheless, we would classify the 1% EPS risk associated with increased pricing rebates as mostly bark, only a tiny bite.

Segment Analysis For Top Drug Companies
Company	% U.S. Revenues*	Est. % Govt. Biz	% At Risk Exposure
Abbott Labs	48%	~8%	~4%
Bristol-Myers	59%	~14%	~9%
Johnson & Johnson	51%	~9%	~5%
Merck & Co.	56%	~10%	~6%
Schering-Plough	30%	~8%	~3%
Eli Lilly & Co.	54%	~18%	~10%
Pfizer, Inc.	42%	~6%	~3%
Wyeth, Inc.	47%	~5%	~2%
*Revenues include all operations, not just Pharmaceuticals

Second Potential Negative: Biologic Generics

It is clear that we will have some sort of path to approval for generic biologic drugs, or "biosimilars," in the near-future. New draft legislation is expected to call for 10 years of market data exclusivity for new biologic drugs - a victory for the biotech industry as Representative Henry Waxman (D-CA), Chairman of the House Energy and Commerce Committee, recently introduced a bill calling for only 5 years of data exclusivity.

But biosimilars will not be as devastating to biotech products as generics were to small molecules. Manufacturing biologic drugs is significantly more cost prohibitive and knowledge intensive than small molecules.

Biotechnology companies themselves often struggle with manufacturing scale-up and meeting demand. Manufacturing Eli Lilly's Erbitux or Amgen's (AMGN) Enbrel is no easy task. There are few generic manufacturers with the necessary expertise, or capital required, to manufacture large batches of biosimilars.

And, there are significant additional hurdles. If the FDA will require proof of bioequivalency, then generic manufacturers will need to start doing costly large-scale clinical trials - something most will shy away from doing. Conversely, if the FDA does not require a bioequivalency study, we believe most doctors will shy away from using the "biosimilar" products because they know the complexity of the manufacturing process and have no proof that the generic Aranesp really is identical to the branded Aranesp.

It's a catch-22 that generic companies looking to break into the biologic market will have to deal with.

That being said, firms with potentially the biggest risk exposure to generic biologic legislation include Amgen and Biogen Idec (BIIB). Teva Pharmaceuticals (TEVA) is most likely the biggest winner.

Top Biologic Drugs And Their Patent Expiration
Neupogen (Amgen)	2013	Neulasta (Amgen)	2015
Aranesp (Amgen)	2014	Enbrel (Amgen)	2012
Myozyme (Genzyme)	2016	Fabrazyme (Genzyme)	2015
Herceptin (Roche)	2019	Avastin (Roche)	2018
Rituxan (Roche)	2018	Lucentis (Roche)	2018
Erbitux (Eli Lilly)	2017	Remicade (J&J)	2014
Humira (Abbott)	2016	Synagis (AstraZeneca)	2018

Third Potential Negative: Drug Reimportation

A consortium of 4 Senators (Dorgan D-ND, Stabenow D-MI, McCain R-AZ, and Snowe R-ME) introduced in early March 2009 the, "Pharmaceutical Market Access and Drug Safety Act." The bill would allow U.S.-licensed pharmacies and drug wholesalers to import FDA-approved medications from Canada, Europe, Australia, New Zealand and Japan - areas where drug prices are on average 35% to 55% lower than in the U.S. The legislation would also allow individual consumers to purchase prescription drugs for personal use from safe, reliable, FDA-inspected Canadian pharmacies.

The Congressional Budget Office (CBO) estimates the bill would save American consumers $50 billion over the next decade, including more than $10 billion in federal government savings. If we assume the savings are linear, or average roughly $5 billion per year, that represents approximately 2% of the total U.S. $250 billion pharmaceutical market. The EPS impact from a 2% haircut to the top-line of each pharmaceutical company, assuming drug reimportation hits everyone equally, is extremely manageable, and will most like average no more than 1% to 2% per company if enacted.

Fourth Potential Negative: Tax Reform

(This also the one with the most teeth.) .

Tax reform has little to do with fixing the healthcare system and more to do with closing loopholes and going after drug company's profits directly.  It is also by far the most socialistic approach to the problem, as we would classify drug reimportation and biosimilars as more capitalistic approaches.

Over the past several years large-pharmaceutical companies have gotten quite good at lowering their effective tax rates thanks to foreign subsidiaries and R&D credits. In fact, the average tax rate using the 14 largest U.S-based pharmaceutical and biotech companies in 2008 was 23%.

It is possible that the President's proposal could raise the effective rate for each firm to 30% by closing these loopholes and cutting R&D tax credits.

That equates to a 7% increase in effective tax rate for the average company, or as much as a 20% to 30% decrease in net income. The details on the tax reform aspect to President Obama's proposal have yet to be divulged, but this does have the potential to be a significant negative for our coverage universe.

2008 Tax Rates for Top U.S. Drug Companies
Abbott Labs	22%	Amgen	22%
Bristol-Myers	22%	Alcon, Inc.	15%
Genentech	36%	Biogen Idec	29%
Genzyme	34%	Gilead Sciences	27%
Johnson & Johnson	23%	Eli Lilly & Co.	21%
Merck & Co.	17%	Pfizer, Inc.	22%
Schering-Plough	15%	Wyeth, Inc.	30%

It's not all potentially bad news though with respect to healthcare reform.We see two potentially very positive changes that could emerge as a result of new legislation.

First Potential Positive: New Research Funding

In early March 2009, President Obama reversed a standing executive order from the previous administration by lifting the federal ban on human clinical testing of embryonic stem cells. This opens the door to potentially billions of dollars in government funding for this new, and potentially breakthrough, platform.

Stem cell companies, although mostly small and unprofitable, are the biggest direct beneficiary of the news. However, big pharmaceutical companies are clearly interested in stem cell research, and with a significantly more friendly administration in control, we may see a big push in this area in the coming years.

Besides opening up funding for stem cell research, the Obama administration has made it clear it wants to see additional increases in funding for infectious diseases such as HIV/AIDS and Hepatitis-C, as well as for cancer and obesity-driven diseases such as diabetes and cardiovascular disease.  At this point, similar to the proposed tax reform, the details are thin. How much money the government will spend and who will get the money remains to be seen, but Genzyme (GENZ) and Gilead would seem to be the two biggest beneficiaries of increased funding in their core areas.

Second Potential Positive: Increase Coverage

This is the "no-brainer" when it comes to how universal healthcare would benefit big drug companies. There are an estimated 40 million people living in the U.S. without health insurance. Opening up some sort of government sponsored program that would insure even half of these people would be a significant revenue driver. We would view this as a systemic benefit across the entire universe of healthcare companies.

Potentially another 20 million Americans looking to use prescription drugs could mean as much as another $25 billion in drug sales per year. That would equate to an increase of over 10% in 2010. Therefore, even if pricing drops by 6% and reimportation takes down sales by another 2-3%, the net top-line impact of Obama's healthcare reform may be negligible if the size of the target market increases.

Healthcare Reform Is Necessary

Fixing healthcare, or at least starting on a long-term solution, is at the center of President Obama's plans for the next 4 years, and for good reason.

According to the National Center for Policy Analysis, the unfunded liability associated with Medicare / Medicaid is roughly 7x that of the current unfunded liability for Social Security. By 2030, it grows to 15x the size.

Social Security may be the "third rail" in American politics, but Medicare / Medicaid is the train bearing down on the tracks.

Still Waiting on the Details

It is also critical to realize that many of the details to President Obama's proposal have yet to be ironed out. That debate will take place on the floor of the House and Senate over the next few months.

What was released last month was more a broad stroke, sweeping legislation, plan of action. The President called for a $634 billion healthcare reform reserve fund over 10 years aimed at fixing many of the problems that exist with the current system. This $634 billion is paid for through $318 billion in tax increases on Americans earning over $250,000 and $316 billion in savings to be squeezed from drug makers, hospitals and managed-care companies.

The net result of healthcare reform is likely to be limited on big pharmaceutical earnings.

As noted above, the effective tax rate change has the potential to take the biggest bite out of profits. What we may end up seeing is a small reduction in revenue growth rates for the largest firms by 2% to 4%, with almost this entire drop hitting the gross margin line. Operating margins are likely to remain stable as most of the company look to cut costs and synergize through mega-mergers (Pfizer-Wyeth, Merck-Schering, Roche-Genentech). The mega-merger trend should continue, with names like Bristol-Myers, Eli Lilly, Sanofi-Aventis (SNY), and AstraZeneca (AZN) most likely the next to jump into the fray. Net margins could take a hit if tax rates increase, which would certainly have a negative impact on earnings, but we expect that this type of broad-based impact to the entire sector will have only limited impact on applied valuation multiples.

When the President's budget is finalized we should get a better sense on how the above 6 forces will impact each name individually. At this point, the fear of healthcare reform seems entirely more bark than bite. Although there is bite, the Amex Pharmaceutical Index is now down 13% YTD, and our calculations show that the expected earnings hit, excluding the tax rate issue, is significantly less.

Wishing you luck,
Jason Napodano, CFA
Senior Analyst, Zacks Equity Research

Jason covers the pharmaceutical industry for Zacks Equity Research. His article on how health care reform may impact the drug sector helps us view certain stocks in a new light.For example, Teva Pharmaceuticals is identified as a potential big winner with new generic biologic legislation. If you'd like to see Jason's in-depth research report on TEVA issued April 1, you may download now by starting a free trial to our Zacks Premium service.

This 30-day free trial entitles you to much more than just the TEVA research report. You will also gain full access to:

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Earlier in February, the $787B economic stimulus package was passed in the Senate and House. The $150B in planned healthcare spending will include $25B towards the expansion of COBRA, $20B for health technology, and $85B for Medicaid assistance to states. The package clearly aims to improve the infrastructure of the healthcare industry and ultimately lower costs and expand access to more Americans.

OPPORTUNITIES

Health technology holds promise of improved operating efficiencies for many parts of the healthcare industry, hospitals included. However, in the short term those that stand to benefit the most from the stimulus are the companies whose business models are based on information technology platforms.

One such company is BioScrip, Inc. (BIOS), a specialty pharmacy services provider and pharmacy benefit manager. Bioscrip operates two interrelated business segments, namely: Specialty Services, which is comprised of specialty pharmacy distribution and clinical management services; and PBM Services, which is comprised of pharmacy benefit management and traditional mail services. We currently rate the stock of Bioscip a Buy.

Despite our currently neutral stance on managed care providers overall, we continue to rate WellPoint (WLP) as a Buy given its broad product offering, geographic reach and potential for added synergy gains from relatively recent acquisitions. That said, we believe the recent action by CMS to suspend the company from enrolling new patients in the health insurance Medicare Advantage plan and the prescription drug benefit, Medicare Part D will add to negative sentiment in the short term. We believe the action by CMS is reversible and highlights operational issues that can be addressed by management in the short term.

Another current Buy recommendation is NovaMed Inc. (NOVA). NOVA is an emerging healthcare services company engaged in the operation of ambulatory surgery centers (ASCs) and the provision of optical products and services to eye-care professionals. We remain positive with the company's performance to date, given the continued strength of cash flows from operations and same facility revenue growth.

WEAKNESSES

Medicaid-focused managed care providers are, to some degree, countercyclical and often perform well in mild recessions. However, and despite the $85B allocated to Medicaid in the stimulus, we remain cautious at this point, given the severity of the current economic downturn and uncertainties surrounding healthcare reform. Unlike other managed care players, Medicaid managed-care companies are highly reliant on funding from state governments, which in turn are subject to budgetary constraints and policy changes at the federal level.

We expect hospitals to gain some relief from the $15B in Medicaid assistance earmarked for immediate distribution to help close budget gaps coupled with the expansion of COBRA. COBRA provides temporary continuation of health coverage in the event of a job loss.

However, we believe the hospital sector will remain under pressure for the remainder of 2009 given anticipated lower consumer spending, high unemployment, and shifts in payer mix further already weakening 4Q08 admission numbers and increasing bad debt levels. We note that hospitals by law must treat all patients in need of emergency care, regardless of whether they have insurance.

We currently rate both Community Health Systems (CYH) and Universal Health Services, Inc. (UHS) with Hold recommendations.Zacks Investment Research

When markets are in turmoil it seems that many investors seem to throw logic out the window. While sustaining losses can cause anyone's blood pressure to rise, how we react to said losses is what separates the successful from the frustrated.

Many of us compartmentalize information and gathered throughout our years in an unconscious effort to save time and cognitive energy. While this psychological process can help us cut corners in our everyday life, it can prove disastrous for your retirement.

An Emotional Response

After seeing a downturn in their account balance many investors will compartmentalize all stocks into one negative, costly asset class. Consequently investors will often choose to avoid stocks all together. However, in any market there are firms that do well. Additionally, market timing has proven to be ineffective time and time again. So, the important mental strategy to adopt now is one of defensive and, most importantly, logical portfolio construction.

A Logical Solution

Simple steps can be taken to find stocks that will out-perform and perhaps prosper in tough economic times. Before even looking at fundamentals, take a look at the businesses that consumers can not do without. An easy way to go about this is looking at your own budget.

Odds are you are not buying new cars or furniture, but I doubt you are cutting your health insurance. Your eating habits may have changed so instead of luxury food makers you may want to investigate companies that offer inexpensive alternative when dining out or food producers geared toward cooking at home. Do yourself a favor and do not lump these types of stocks in with high-flying tech stocks.

As for how to pick defensive stocks, you can read more about selecting defensive companies in a previous "Investment Ideas" article from my Sept 19 article Getting Defensive in an Offensive Market".

Some Examples

Below are just a few ideas of companies in industries with consistent demand and could benefit from consumers changing habits.

Diamond Foods, Inc. (DMND)announced record snack sales on Dec 23. Snacks grew 22% in Nov, to above $5 million, the best month on record. The stocks beta is currently -0.1, ideal for uncertain markets.

The food producer makes affordable and healthy snacks as well as confections used in at home meal preparation.

Michael J. Mendes, President and CEO, said "Looking ahead, our brands are well positioned to benefit from changes in spending patterns as consumers prepare more meals at home or look for greater value in their food choices."

Nash Finch Co. (NAFC) has a beta of 0.6, which could me more conservative, but given their business they are quite attractive at roughly 10 times forward earnings.

Nash is a food wholesaler, retailer, and distributor for the nations military. Total sales of $1.44 billion were announced during the company's third-quarter earnings announcement on Nov 6. Sales rose 5.1% on a year-over-year basis, up from $1.38 billion.

Chemed Corp. (CHE) reported impressive third-quarter results in its latest announcement that included earnings per share of 79 cents. Earnings came in 3 cents over the consensus for the second consecutive surprise and the third in the past 4 quarters.

The hospice provider, which has a beta of just 0.1, saw revenues rise to $288 million, a 5.8% year-over-year increase. The main driver was the VITAS segment, which saw patient revenue rise 8.7% to $205 million.

Emergency Medical Services Corp. (EMS) is a leading provider of emergency medical and transportation services. In its latest announcement EMSC reported third-quarter results that included net revenue of $679 million, a 28% year-over-year increase.

Earnings per share were 66 cents, 94% higher than the third quarter of 2007. Net income was 47% higher than the consensus estimate, making it the third consecutive earnings surprise. The company also raised full-year guidance again and now expect EPS to be between $1.90 and $2.00, up from between $1.70 and $1.75.

The beta for the medical services provider is just 0.5.

Tying it All Together

As you can see, using a logical thought process and focusing on the basics is a necessity in this market. Take a look at what changes you are making or not making to your lifestyle or spending habits and odds are most Americans are doing the same. Find out who can profit from that and don't be afraid to get on board. Just make sure to take your time, do the due diligence, and above all remember that not all stocks are the same.
"CHE" Free Stock Analysis: Buy? Sell? Hold?
"NAFC" Free Stock Analysis: Buy? Sell? Hold?
"EMS" Free Stock Analysis: Buy? Sell? Hold?
"DMND" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

When markets are in turmoil it seems that many investors seem to throw logic out the window. While sustaining losses can cause anyone's blood pressure to rise, how we react to said losses is what separates the successful from the frustrated.

Many of us compartmentalize information and gathered throughout our years in an unconscious effort to save time and cognitive energy. While this psychological process can help us cut corners in our everyday life, it can prove disastrous for your retirement.

An Emotional Response

After seeing a downturn in their account balance many investors will compartmentalize all stocks into one negative, costly asset class. Consequently investors will often choose to avoid stocks all together. However, in any market there are firms that do well. Additionally, market timing has proven to be ineffective time and time again. So, the important mental strategy to adopt now is one of defensive and, most importantly, logical portfolio construction.

A Logical Solution

Simple steps can be taken to find stocks that will out-perform and perhaps prosper in tough economic times. Before even looking at fundamentals, take a look at the businesses that consumers can not do without. An easy way to go about this is looking at your own budget.

Odds are you are not buying new cars or furniture, but I doubt you are cutting your health insurance. Your eating habits may have changed so instead of luxury food makers you may want to investigate companies that offer inexpensive alternative when dining out or food producers geared toward cooking at home. Do yourself a favor and do not lump these types of stocks in with high-flying tech stocks.

As for how to pick defensive stocks, you can read more about selecting defensive companies in a previous "Investment Ideas" article from my Sept 19 article Getting Defensive in an Offensive Market".

Some Examples

Below are just a few ideas of companies in industries with consistent demand and could benefit from consumers changing habits.

Diamond Foods, Inc. (DMND)announced record snack sales on Dec 23. Snacks grew 22% in Nov, to above $5 million, the best month on record. The stocks beta is currently -0.1, ideal for uncertain markets.

The food producer makes affordable and healthy snacks as well as confections used in at home meal preparation.

Michael J. Mendes, President and CEO, said "Looking ahead, our brands are well positioned to benefit from changes in spending patterns as consumers prepare more meals at home or look for greater value in their food choices."

Nash Finch Co. (NAFC) has a beta of 0.6, which could me more conservative, but given their business they are quite attractive at roughly 10 times forward earnings.

Nash is a food wholesaler, retailer, and distributor for the nations military. Total sales of $1.44 billion were announced during the company's third-quarter earnings announcement on Nov 6. Sales rose 5.1% on a year-over-year basis, up from $1.38 billion.

Chemed Corp. (CHE) reported impressive third-quarter results in its latest announcement that included earnings per share of 79 cents. Earnings came in 3 cents over the consensus for the second consecutive surprise and the third in the past 4 quarters.

The hospice provider, which has a beta of just 0.1, saw revenues rise to $288 million, a 5.8% year-over-year increase. The main driver was the VITAS segment, which saw patient revenue rise 8.7% to $205 million.

Emergency Medical Services Corp. (EMS) is a leading provider of emergency medical and transportation services. In its latest announcement EMSC reported third-quarter results that included net revenue of $679 million, a 28% year-over-year increase.

Earnings per share were 66 cents, 94% higher than the third quarter of 2007. Net income was 47% higher than the consensus estimate, making it the third consecutive earnings surprise. The company also raised full-year guidance again and now expect EPS to be between $1.90 and $2.00, up from between $1.70 and $1.75.

The beta for the medical services provider is just 0.5.

Tying it All Together

As you can see, using a logical thought process and focusing on the basics is a necessity in this market. Take a look at what changes you are making or not making to your lifestyle or spending habits and odds are most Americans are doing the same. Find out who can profit from that and don't be afraid to get on board. Just make sure to take your time, do the due diligence, and above all remember that not all stocks are the same.
"CHE" Free Stock Analysis: Buy? Sell? Hold?
"NAFC" Free Stock Analysis: Buy? Sell? Hold?
"EMS" Free Stock Analysis: Buy? Sell? Hold?
"DMND" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

We believe the action by CMS is reversible and highlights operational issues that can be addressed by management in the short term. We are presently reviewing our 6-month share price target in light of recent guidance by management however maintain our Buy recommendation at current levels.

WellPoint had been working with CMS to resolve issues identified as a result of internal compliance audits and findings. The decision does not affect current Medicare beneficiaries enrolled in the company's plans. The company also announced it expects to record $349M in net investment losses after taxes for 4Q08. WLP will report 4Q08 financial results on January 28, 2009.

Read the analyst note on WLP

- But W. didn’t stop there. Apart from wanting governments to be “smarter” (who doesn’t?), he called for called for leaders to recognize that “government intervention is not a cure-all” for economic problems. So what was Fannie and Freddie all about? Or Hank Paulson’s Troubled Assets Relief Program. Or the bailout of AIG? If government is not a cure-all,…

- But W. didn’t stop there. Apart from wanting governments to be “smarter” (who doesn’t?), he called for called for leaders to recognize that “government intervention is not a cure-all” for economic problems. So what was Fannie and Freddie all about? Or Hank Paulson’s Troubled Assets Relief Program. Or the bailout of AIG? If government is not a cure-all,…

This from The Daily Reckoning:

“Balloon bursts on festive parties in tough times,” is a headline at the Financial Times. Companies are cutting back sharply on their holiday celebrations. We know that from personal experience. A memo just received from corporate headquarters in Baltimore tells us that the annual Christmas party will be greatly scaled down. “Employees only,”…

Below we present a list of the cheapest S&P 500 companies based on 2009 low estimates.  Since I simply do not trust the numbers, I have excluded from the list all firms from the financial sector.  However, I would note that we classify the health insurance companies under health care, and not among the financials.  I kept those names on the list, however there is substantial reason to be worried that their portfolios have lots of toxic assets in them just as life or P&C insurance companies.  Use this list as a starting point to scout for values, not as a blind buy list. 

We have eliminated all firms with Zacks ranks of 4 or 5 ("sell" or "strong sell").  The change in estimate column refers to the mean estimate, not the low estimate, but as you can see the estimates have been coming down for most of these firms, often falling quite sharply. 

Still if the low estimate holds, these firms look like fairly compelling values.  All have P/E's based on their low estimates of below 8, and several provide very nice dividend yields to reward you while you wait for economic conditions to improve.

Barack Obama Hedge Fund Link Fest

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